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Technology Stocks : Loral Space & Communications -- Ignore unavailable to you. Want to Upgrade?

To: john ciccozzi who wrote (1715)	1/19/1998 8:00:00 PM
From: JMD	Read Replies (2) \| Respond to of 10852

john, I'm pressed for time so will do a lousy job on the Oppenheimer study summary; if I can do a better one later I will. So here's the chopped liver (from memory, original at my office): What the O report brings out most clearly is the evolution of the LOR biz plan--they start life with an incredible asset: the ability to build the birds. Think about that; Gates and McCaw want to get in to the biz and even two mega-billionaires have to go elsewhere to get the damn things built: Boeing, Hughes, Motorola, Loral, European Company (forget name)--maybe 6 companies on the planet that can build these things--talk about barriers to entry! Don't care how much dough you got, the technological/manufacturing complexity is of a whole different order. And this year LOR built more birds than anybody and are currently sporting a $2.2 BILLION dollar backlog. Margins aren't huge but decent and provide good cash flow to support new businesses plus it keeps them on the cutting edge so that the birds they build for their own constellations are state of the art. And of course that is phase two of the biz model--build a constellation and lease out transponder space. First up, as you know, is Globalstar which will provide telephony services. Then, just in calendar 1997, LOR snags ONSI and SatMex, which gives them GEO birds (3 by 2000) and Mexico/Latin America coverage for DTH services. But wait, how about data? Enter JV with Alcatel for Skynet/CyberStar and virtually everybody and his brother predicts at least one more acquisition in 1998: Mr. Schwartz doesn't need to be told that it's much faster to acquire existing slotting rights and/or systems in place than to build from scratch. (My guess is Comsat even though I am told that it is politically next to impossible--for Mr. Schwartz I think that just makes it all the more attractive.) The end result is just amazing to contemplate: LEO,MEO, and GEO constellations spanning the globe offering voice, data, video in any and every combination--AND EVERY DAMN ONE OF THE LOR CONSTELLATIONS WILL BE BROUGHT IN AT AN INVESTED CAPITAL COST DRAMATICALLY LOWER (AS IN ONE, TWO, OR THREE BILLION DOLLARS LOWER)THAN THE COMPETITION. G* about $2.5 B under Iridium, Skynet $3+ B under Teledesic, SatMex arguably infinite cause there are no more slotting rights for Mexico and precious few left for Latin America. Interestingly, the O report did not mention that G's transponders will be using CDMA, nor that G will be 'bent pipe' but merely pointed out that G* will be significantly lower priced (and cheaper to operate, thanks QCOM!) than Iridium. Anyway, I'm a LOR nutcase but that's the meat of the coconut as far as the O report is concerned and yes I've probably editorialized a bit but Bernie is on a mission to leverage the manufuacturing capacity into what IMO will arguably be one of only three or four system owners capable of offering multiple media communications capability to every spot on the planet. Think it'll make any money? Thankfully Oppenheimer has gotten on board--I figure it will only take another year, two at most, for the rest of Wall Street to figure it out. Hope this helps. Mike Doyle