I have had to cut my time at the meeting(s) short, due to real work stuff going on. But I got the information that I wanted.
On China - there were several questions raised by shareholders over LOR's involvement in the China guidance "scandal." Bernard stuck to his guns and defended LOR and LOR personnel stating that LOR worked in good faith with the Chinese and did not break any regulations. When asked by one shareholder why he was not being more outspoken and challenging the press, Bernard joked that no one ever told him that they thought he was not outspoken, and that challenging the press was not a smart idea in his opinion. He stated that LOR's reaction is different than that of Hughes because they have a different mentality when dealing with the press.
On the issuance of new shares - Bernard was questioned by several shareholders about the recent issuance of new shares, and that they felt it would have a very dilutive effect and decrease shareholder returns. One shareholder went so far as to compare LOR's actions to Cendant! What the hell was this guy thinking? Anyway, Bernard contends that the money raised by these equity offerings will help LOR pay for its proposed increase in ownership of G*, as well as provide it with additional capital for future acquisitions. He made very encouraging remarks with regard to the "asian flu" and stated that he saw excellent opportunities there. Personally, I would not be surprised if LOR makes a move on a Southeast Asian satellite concern.
Also, Bernard mentioned the proposed Soros investment in G*, and stressed the fact that LOR got Soros to offer a $8+ premium on the price LOR will pay for the shares. Of course, this deal is not certain, as the G* partners need to decide whether to accept the offer. Bernard sees any decision by the partners as a good sign. IMO, I think it is a better sign if the partners keep their shares, because that means that the other partners value G* at far greater than $50 or even $58 per share -- which means they probably also see that significant upside is likely.
Y2K problem - A shareholder asked whether LOR was looking into the widely known Y2K problem, and Bernard assured that LOR techies are indeed aware of the problem, and are working on it, and that LOR will be spending substantial money to make sure things run smoothly. Bernard kinda glossed over the issue.
On succession - Several shareholders asked questions regarding the average age of the Board, and what kind of succession plans there were. Bernard defended the management by saying that everyone in management has worked together for a long time, and everyone knows the business equally well. The spokesman is not as important as the whole team, he claimed.
On Globalstar demand - Bernard is not concerned at all about demand. He believes that the G* business plan needs such a small portion of the total projected demand to be profitable, that it is practically a no-brainer. But he did note that the real time to look for subscriber numbers is post-2000, like 2001 and 2002. Subscriber numbers in 1999 will not be a good indicator in his opinion. Also, he notes that there are well over 200,000 Brazilians, 83,000 Indians waiting for such a service alone. Also, he plays up the importance that China Telecom made an equity investment, in cash, which he repeated three times, in G*. G* is the only project of this kind that China Telecom has an equity stake in, let alone a cash one for the Chinese government. He is also not concerned about the fact that Iridium is going to beat G* to market by about 5 months, instead of the previously anticipated 3 months. BTW, G* announced a 2-1 stock split...
On Zenit launches - Bernard discounted rumors that the Zenit launch vehicle was not safe. He contended that LOR has been working closely with the Zenit prior to launch, and that satellite launches are risky, period. He said that approximately 10-11% of satellites are lost, which is why G* has so many spares, both in orbit and on the ground.
There was a presentation, stating LOR will be earnings positive in 2000, and a propaganda film for LOR and its business units/partners. A lot of talking was done about Loral Skynet and Satmex, and that the most powerful satellite ever is being developed by SSL, a 20 kilowatt power supply. Satmex and Skynet, though, seemed to be what Bernard was trying to push the most, and how profitable they will both be. How the Satmex satellite slated for launch, Satmex 5 I think, will cover the Western Hemisphere and deliver programming to 500 million Spanish speaking people.
Orion got some airtime as well, especially the fact that with Orion's two other satellites, launched later this year, it will serve over 85% of the globe.
Those were the highlights as I saw them. Oh, Bernard said that LOR should see profits of $1 billion in Year 2000, and $3 billion in Year 2002... I may have those numbers or years mixed up, but I think I got them right. |
