Readware's going on a much deserved vacation. Here's his latest comments.... For context, I included a post of mine re: Cyberstar so you all would know what Readware was responding to, otherwise it would be confusing.
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Subject: Loral SatMex: An "El Dorado of Riches"
Date: Sun, Apr 19, 1998 15:36 EDT
From: Readware
Message-id: <1998041919365800.PAA12990@ladder01.news.aol.com>
In our 12 June 1997 report hypothesizing LOR's prospects for a SatMex acquisition we had called the Latin America satcom market an "El Dorado of riches". The phrase from the 17th century explorer Hernando Cortez could not have been more apt. We are pleased to report that we were correct.
A check of transponer revenue fees among Loral's Latin American competitors for 1st qtr 1998 shows a 13% year-over-year increase, almost double what we had forecast in Augusy 1997. DBS cable headend progarm distribution demand is up over 37% in Pramer Argentina alone. And CVN SNG commercial demand is up 11%. VSAT network growth has increased 19%, teleport service revenues 13%. MPEG compression efficiencies, combined with value-added digitized
telephony/voice protocols, have created a demand for private networks, benefitting the VSAT market in percentage terms we had not foreseen. Jose Rios, president of Hughes' Galaxy LAtin America reports a revenue growth from 1st qtr 1996 to 1st qtr 1998 of over $80 million. Intelsat's Thomas Eaton reports for the 27 fleet Intelsat constellation a 112% increase in revenues for the same period in Latin America, with expectations of a similar griowth for
the 1998-'99 fiscal year. With the more powerful Galaxy 8i and Intelsat's 808 and 805 deployment first half 1998 we expect fully these revenue efficiencies to continue.
For Loral Skynet/SatMex we make the inferential claim of a 17% transponder revenue increase 4th qtr '97 to 1st qtr '98, with an 80 basis point increase in margins for the same period. Currently the fleet covers Mexico, 40% of the US, and most of Latin America and all the Caribbean. With SatMex V to be launched 4th qtr 1998 Argentina and Canada will be added. Up to now only SNG and DTH have been Loral's targeted market, but with the launch this year
and next of Telstar 6-9 by mid-1999 we expect Loral to be involved in the rapidly growing private network market that Latin American deregulation has fostered. Additionally on the new Telstar GEOs we expect SSL will be using CES' Speet Time Technology innovations that mitigate signal fade without a need for power increase. Combined with transponder reduction costs along the lines of Lockheed's A 2100 satellite, we see Skynet/SatMex transponder
mragins firming even more as we move into the 4th qtr 1998 and beyond. Implementation of Electromagnetic Sciences' beam forming netwrk innovations promise increased improvements in return on the fleet in its deployment for the private network market.
We do not expect any dimunition from these rates of increase, as now the broadband demand in Latin America shows rising numbers throughout satcom digital deliveries. As Brazil moves to privatise its government slots we see three actual finalists only: Loral-Alcatel, Lockheed, and a yet to be finalized Brazilian based consortium. That aside, however, the Latin American market has exceeded our growth expectations, of which we were already optimistic.
As Loral expands its fleet coverage in this burgeoning area, we expect Loral's acquisition of SatMex to realize a full return in five years. That is quicker than our original 2005 estimate, and more than justifies Loral's entrance into this market for its shareholers.
Subject: Re: china
Date: Sun, Apr 19, 1998 16:11 EDT
From: Readware
Message-id: <1998041920113200.QAA16904@ladder01.news.aol.com>
I did not express an opinion on the LOR/China matter. What I stated was fact-- LOR did nothing wrong, nor did Hughes. Nor did Iridium.
And China does not have nuclear delivery capability.
I will leave it at that.
Subject: Re: Cyberstar
Date: Tue, Apr 14, 1998 22:16 EDT
From: Fozziebare
Message-id: <1998041502164000.WAA05968@ladder03.news.aol.com>
Question:
Could the C* network be used to provide a kind of "back-up" or backbone support for cable companies and phone companies as they both roll out high speed modems? I mean, can cable modems jump onto the C* network, or is the network proprietary for C* subscribers only? In other words, can C* lease capacity, or bandwidth, to other high speed terrestrial Internet providers like cable companies, phone companies, etc?
I think that makes sense. If not, hit me over the head at the shareholder meeting...
Subject: Re: Cyberstar
Date: Sun, Apr 19, 1998 16:19 EDT
From: Readware
Message-id: <1998041920194400.QAA17846@ladder01.news.aol.com>
No-- what you say is quite on target. Have you been talking to WorldComm/MCI? C* would be a perfect fill-in in this regard for them. Not that it will occur-- but the model you suggest is very compelling between fiber and satcom.
Subject: Re: VSAT
Date: Sun, Apr 19, 1998 16:21 EDT
From: Readware
Message-id: <1998041920213000.QAA16782@ladder03.news.aol.com>
When you get a chance, Valuer, check out Interstate Electronics in Anaheim and see what is up with them vis-a-vis VSAT telelphony and their RATE system.
I will be back in 10 days.
Subject: Re: READWARE
Date: Sun, Apr 19, 1998 20:28 EDT
From: Readware
Message-id: <1998042000285000.UAA16773@ladder03.news.aol.com>
1. I think that LOR has purchased more G*-- the last time they called the G* converts they ended up owning more shares-- it is now 40.1%. Just a surmise on my part.
2. The Hewlett Packard-Cyberstar announcement could only have been surpassed by an IBM-Cyberstar announcement. The announcement of early April was only an inchoate indication of the colloboration between the two companies. Hewlett's intranet/extranet network effort is worlwide, and their colloboration with Cyberstar is an endorsement of Cyberstar's technology, business plan, and service capability.
Now all C* needs do is announce its internet partner. At the NAB conference were conflicting indications from both Telecommunications Inc. and LOR on whether or not any collaboration with @home network was in the offing. Telecommunications Inc. indicated at the conference something was afoot, but a LOR spokesman asserted he was unaware of any pending agreeement. The critical word may be "pending".
Andersen Consulting indicates the market into which C* is moving will be a $30 billion market by the year 2000. The Internet Engineers Telecommunications Forum has published a study (the size of a dictionary) which I have begun reading that calls the number $45 billion. These studies have to be viewed cautiously because of the largesse of their projections. If you halve the Andersen number, C* will be entering a $15 billion revenue market in 2000
that will have Astrolink, all the Hughes systems, Americom GE, Intelsat, ICO, and C*. Hughes, large as it is, will be coming on-line probably nine months after C* (scheduled for full roll-out, according to their advertiser consultant Winkler Associates of San Francisco, in August-September of 1998). The other systems will only be starting sometime in AD 2000. In the most pessimistic of scenarios, what revenue number do you expect for C*? If, as I
expect, Orion and Skynet will be collaborating with C*, the system will be formidable.
Along with this, Europe*Star launches its first satcom in the 4th qtr of 1999, and it does appear to us that C* will probably not launch their GEOs separately (as oriignally conceived), but will be using the Europe*Star GEOs in the beginning, and then add on GEOs as market conditions require in 2001 and beyond in sync with Skybridge. Europe*Star will be launching 3 GEOs that will each harbor more transponders than Orion FM1, and the fleet of Orion,
Sky, and Europe*Star for C* will, we believe, be capable of doing $700 million in revenues for Loral C* in AD 2000 on Ka and Ku bands. If we are right, C* will have double the revenues we had forecast for C* in our 1996 report for the year 2000.
This number completely disregards the home market revenues. The home PC market is a hornet's nest of razor thin margins and incalculable competition. We believe that Skyrbidge will in fact be the effort to move into the home PC market in competition with Motorola-Marconi's Celestri and Teledesic and that C* will be more decicated to the professional market (business, telemedicine, and the like). New England Satellite Systems is a material provider of
telemedicine, and watching their progress may indicate how a telemedicine effort by Loral takes shape.
Subject: Re: weak link
Date: Sun, Apr 19, 1998 20:45 EDT
From: Readware
Message-id: <1998042000454400.UAA19032@ladder03.news.aol.com>
No signal from G* is handed off to a local carrier, but to a regional gateway within the G* system. The partners in the G* consortium have the responsibility for maintaining the integrity of the gateways-- for which they have paid. No local carrier (read: no carrier not in the G* consortium) has responsibilities for these gateways.The local carrier (read: no carrier not in the G* consortium) only bills-- provides absolutely no technology
whatsoever for the call made in the G* system. G* will always and under all circumstances collect $.47/minute on any call made within its system-- it takes the money "from the top"-- before the partner or local carrier gets a cent. The system was softwared that way. In every payment, the local carrier or G* partner gets no revenue before G*-- only after G*gets its take can the local carrier or partner be paid. And G* will be have first rights to all
revenues generated over its system, local carrier or not willing that to be the case. The G* management, in effect, developed the system such that G* management, and not the partners or local carriers, virtually controls the billing.
You raise a very important issue on the quality of the signal in the local loop. G* has already been testing these signals over the past four weeks. They will continue testing them as the fleet fills out, and make adjustments when needed-- though the system has been designed such that weak signals will be a minor issue to correct.
Subject: Re: Readware
Date: Sun, Apr 19, 1998 20:50 EDT
From: Readware
Message-id: <1998042000500300.UAA20882@ladder01.news.aol.com>
No-- I am going to Vienna tomorrow-- "the city of my dreams"-- for nine days. Of all the places I have ever been, it always calls me back. I have every confidence that the launch of the 23rd will execute flawlessly.
Thank you for your nice thoughts, though. |
