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To: arun gera who wrote (1936)	12/5/1997 5:01:00 PM
From: Robert A. Sutherland	Respond to of 3506

Interesting observation. I really admire Orbital's innovation in "space services" and think they should be watched much like Loral Space, but for different reasons. Orbital is pushing the envelope on "low-cost" rapid deployment communications systems. They need the user segment, but understand the space segment. Spinning off application companies helps build their requirement base. But their model is not military, it's low-cost commercial. I honestly don't understand why Orbital bought Magellan in the first place. There is no doubt that GPS has a place in the Orbital market space, but ORBCOMM is the only wholly inserted infrastructure I have seen them deploy. Orbital uses GPS for space navigation, but you don't need to buy a company for that!. It's possible ORBCOMM was the entire intent of the purchase, but Orbital found it didn't have the time to address the management requirements for Magellan and just spun it off to an operation that had exhibited the ability and interest to do so. Orbital then has limited their liability, and potentially can profit from the growth of the new entity. Even at $125mm valuation, its a sizeable chunk of assets. It's also possible that Orbital is having trouble attracting other handset vendors to the ORBCOMM system because of their captive supplier. If this is the case, watch for Orbital to find a way to reduce it's 66% holdings to something substantially less! I don't know how long a leash Orbital has Magellan on.