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

To: Sawtooth who wrote (2858)	5/4/1998 5:22:00 PM
From: Geoff	Read Replies (1) \| Respond to of 10852

Readware......... ================= Subject: 1st Qtr Earnings Comments Date: Sat, May 2, 1998 02:30 EDT From: Readware Message-id: <1998050206300200.CAA03493@ladder01.news.aol.com> We estimate that LOR 1st qtr 1998 earnings will break out this way: (numbers are in EBITDA before development costs): 1. SatMex: $13 million 2. Skynet: $24 million 3. SSL: $26 million Comments: Skynet's transponder margins, we estimate, have risen 70bp since our last report, and are now at 83%-- a 3.6% rise over last qtr. This is admirable. We expect Skynet transponder margins to be at parity with PanAmSat's 85% by 4th qtr 1998. We expect those margins to move to 85.4% by 1st qtr 1999. That would be at almost peak margins. Orion was not part of LOR till 20 March 1998. In any event, we estimate that Orion's private network ("service") revenues (WAN/LAN connectivity demand) grew 54% from 4th qtr '97 to 1st qtr '98. Transponder leasings we estimate grew 29% in the same time period. Division revenues (not EBITDA) for 1st qtr we estimate are $39 million with a fully operating Hawaiian Gateway. We fully expect the private network revenues to rise close to 140% (year-over-year). This will add to revenues/transponder for the Orion fleet. We look for those revenues/transponder to rise to $2.7million by year end. We do believe that Orion will increase its transponder ownership sometime in the next four months through Loral. That may change our year-end revenues/transponder number estimate. These numbers are estimates only. Pending the G* Partnership ownership transfer and the Soros Funds investment as written, Loral could realize a 2nd qtr profit of $142 million from the transaction. Realization of that profit is hypothetical till certain announced intended transactions are actually effected. *** In answer to the email: we expect LOR to earn $4.56 in the year 2002 on shares of 266 million basic. I do not know where you got the number $1.50 from. The projection assumes 500 revenue generating transponders, and a 38% ownership in G. As the quarters proceed, and LOR moves to a 48% ownership of G, which we fully expect to be the case by the end of 1999, that $4.56 estimate may change. Our target price for LOR in 2002 is $140/share. This assumes that an equilibrium 6% 10-year bond rate is maintained from 1996 to 2002, with a net earnings/share of $4.56. *** As to the C* question on issuing stock: we believe that monies for C* will not be raised separately by Loral in a public equity offering. Loral and Alcatel are to expend $300 million for the initiation of EuropeStar, and raise monies from partners for Skybridge (that is already finished, by the way), and then from the public capital markets. We believe that C will be functioning off part of the EuropeStar constellation, as well as Loral GEOs to be built, acquired, or in orbit already. As Skybridge initiates, we believe a C GEO will be linked with the Skybridge LEOs, as well as 3 Skybridge GEOs, paid for out of public equity offering monies. In 2001 we expect C* to become a Ku-Ka-band system with two Ka GEOs and one Ku. There may be development costs paid for out of LOR 2000 and 2001 earnings for one C* GEO each year. But we do not believe that Loral will need to issue equity for C* in the public equity markets. Internal profits should be able to provide for the construction of the system that C* need to generate $1.36 billion in revenues in fiscal year 2002. Subject: Re: Readware on Gstrf cash Date: Sat, May 2, 1998 14:12 EDT From: Readware Message-id: <1998050218121400.OAA14308@ladder03.news.aol.com> 1. G* should meet our expectations. Let me put it this way: wireless subscriptions between now and 2003 are expected to grow by 300 million users. 70 million people combined are on Iridium and G* partner/local telco waiting lists. These are people that have no access to land or fiber. G, according to its CFO, needs 400,000 users to start generating free cash flow. We think they will have out of the 70 million on the waiting list 1.82 million mobile subscribers by 2002 using the system close to 2 hours/month. There is nothing hyper, exaggerated, or remarkable in these estimates. It simply appears to us to be a pedestiran business fact, pure and simple. If you were in the satellite industry and saw the demand for voice this business projection would not appear to be miraculous or astonishing. You'll just have to wait and see as the ramp-up unfolds. The good news is that Iridium will give you an early indication. And I know that its Brazilian market is very strong-- and that is at $5/minute! 2. SSL will build the 2nd gen LEOs with outsourcing. I do think Hyundai will be involved in that, unless something has changed with their relinquishing of G partner common. 3. The next gen LEOs will be far cheaper to build, with lower sat launch costs. So the amount of funds required will probably be 35-40% of what was required. I would think G* will offer equity to finance the new system, with some monies also from free cash flow-- not debt. I do not believe, and can't imagine, that G* will ever need to issue debt again. And because the equity shares offered will be earnings accretive, it will not be dilutive of shareholder equity. 4. Globalstar Telecom (GSTRF) is not really 20% owned by G* partners. GSTRF is Globalstar as publicly traded. GSTRF is owned by the public. I have explained that breakdown twice now, I believe. It might be contained in that FAQ that people talk about, no? 5. On G* dividends in the future: the G* management has addressed that issue on three occasions of which I know. It has never committed to dividends on those occasions-- only remarking that they certainly would have to be considered. 6. On the partners and cash flow: if you were G's managing partner, would you not want all that free cash flow for yourself? Who knows who or who will not be the partners once G cash starts. Subject: Re: Earnings Date: Sun, May 3, 1998 18:45 EDT From: Readware Message-id: <1998050322455000.SAA06435@ladder03.news.aol.com> The earnings will come out the third week in May.