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Technology Stocks : Orbital science (ORB) -- Ignore unavailable to you. Want to Upgrade?

To: DIAMOND JIM who wrote (664)	12/30/1997 9:31:00 PM
From: Michael Young	Read Replies (1) \| Respond to of 2394

The price action the past few days demonstrates that the Orbcomm launches are what the market cares most about. ORBI's other launch business is nice, but it is the Orbcomm system that really gets the market excited. I'm not going to say PE isn't important, but I think Orbcomm becoming the first system with worldwide coverage is huge. Compare the market value of ORBI to IRIDF and GSTRF if you want to do some valuation analysis. IRIDF is at $5.2 billion and GSTRF is $1.5 billion. And those are specialized service companies only, whereas ORBI has the satellite launch and contruction as well as GPS businesses. In that light ORBI has a long way to run. Sure the IRIDF and GSTRF systems will have more capability, but they are also MUCH more expensive and those companies are carrying a ton of debt. Is there really a huge market for $3 a minute phone calls as IRIDF would have the market believe? Maybe, but I'm much more certain there is a market for international companies to track their assets worldwide as well as allowing employees to send short messages around the world with minimal delay. $90 a share within 12 months is not realistic, but don't discount the market's desire for a damn good story. MIKE

To: DIAMOND JIM who wrote (664)	12/30/1997 9:44:00 PM
From: Michael Young	Respond to of 2394

Here's something to add to the excitement: <<Little LEO' Messaging Offers Growth Opportunity Manufacturers Could Help Satellite Providers Become ISPs ÿ 12/22/97 Internet Week ÿ The emergence of low earth orbit (LEO) satellite systems in the next few years will create new, potentially very lucrative opportunities for Internet routing and switching gear makers who could help low-bandwidth global satellite messaging services become a new shade of Internet service provider. LEO Plans Three "Little LEO" companies have begun or outlined future services that experts say will lead the push to make the broader LEO market - led by Comsat [CQ] and Iridium LLC [IRIDF] - a potentially $4 billion a year industry by 2004. The Little LEOs plan to integrate the best capabilities of terrestrial and celestial networks to deliver email and other messages to and from subscribers located literally anywhere in the world. Of the three, ORBCOMM [ORBI], Final Analysis and LEO One, only ORBCOMM has LEO satellites (two) circling the planet. The company was forced to delay the launch of eight more satellites last week, but hopes to get them airborne within a few weeks, with two-dozen more to follow in 1998 and 1999. The planned constellation will create a global access network for the service provider that will be accessed by business, consumer and military end-users. ISP in the Sky Several analysts contacted by Internet Week agreed that the subscriber services ORBCOMM plans to offer through various value-added resellers worldwide, such as ARINC, closely mimic that of typical ISPs offering email access. Amongst a variety of possible uses, subscribers can send messages to LEO satellites tha bounce them back to Global Earth Stations (GES) - likened to an ISP's point-of-presence (POP) - and across an internal backbone to a Network Control Center (NCC). The NCC then determines whether to route a message through dedicated lines or over the Internet. "What they offer is not that dissimilar from a traditional ISP because, for one thing, you sit down at your terminal and send an email message," said market analyst Carol Ingley, president of C.A. Ingley & Co. in Washington, D.C. If email messaging ends up as the driving force of the Little LEO market in the next few years as systems are deployed, it stands to reason that the Internet itself will play a major role. ORBCOMM president Alan Parker confirms this, saying the company will rely more and more on the Internet to deliver its customers' messages. "When our system is in full operation, we expect that Internet [email] will account for about one-half of all inbound and outbound traffic received at the ORBCOMM routing center," Parker said, specifying the rest will be routed through dedicated lines, dial-up lines, or PSTN and PSDN networks. Ingley said that while it's still too early to say positively whether messaging will indeed be a dominant aspect of the Little LEOs' business in the long-term, she predicts that by 2004, nearly 60 percent of subscribers will likely be for global personal messaging. "I think that personal messaging will grow faster than other possible uses like tracking and monitoring," Ingley said. "In the mass marketplace you can get economies of scale that you wouldn't get with tracking systems." ISP Connection These messages will be short in length and packet size due to LEO bandwidth limitations, but the resulting throughput traffic would almost certainly require a continual beefing up of ISP routing centers, meaning companies like ORBCOMM might decide it's more economically prudent to simply create their own Internet remote-access infrastructure. Presently, ORBCOMM sends and receives email through Dulles, Va. neighbor PSINet's [PSIX] system, and Parker said other deals with ISPs are possible. But, Ingley said it might be smarter for ORBCOMM to assume the ISP role themselves. "ORBCOMM might become an ISP, or they might have relationships with lots of ISPs, because they're going to have a phenomenal amount of email volume coming through," she said. "It's possible that manufacturers of infrastructure gear for ISPs might be able to go in and show a company like ORBCOMM how to become an ISP." "Should Little LEOs buy Internet infrastructure equipment themselves? It could be an opportunity [for hardware manufacturers] but it's still very early to guess," said Vijay Jayant, an analyst with Bear Stearns [BSC] on Wall Street. "It's a new, esoteric venture. From a risk basis, they need 300,000-400,000 subscribers to break even on their investment," Jayant said. Though somewhat doubtful, the analyst said that if messaging proves to be the dominant feature of the Little LEO marketplace "it makes sense that it might be cheaper [for companies like ORBCOMM]to buy their own Internet gear." ORBCOMM's Parker objected to characterizing the company as an ISP in the making. Is ORBCOMM an ISP? "We're not an ISP in terms of the common usage of the label 'ISP,'" he said. "ORBCOMM is a message switched service that directs traffic to a variety of connections. The customer decides what service access they desire." Why so adamant about the distinction? "The reason they don't want to be called an ISP is because they're doing a host of other things besides email messaging," said CIBC Oppenheimer analyst Marc Crossman. "It takes time to build the messaging marketpaging and messaging have greater market potential because it's very mainstream," he said. In the near-term - the next two to three years - Crossman said he believes ORBCOMM will find greater revenue in the tracking and monitoring of machines and pipelines. "After that who knows what's going to happen?" ORBCOMM's Parker projected the company's entire investment is under $400 million, from the outset to breaking even in 1999. >>