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

To: Joseph F. Trombetta who wrote (4325)	8/24/1998 8:47:00 PM
From: Rocket Scientist	Read Replies (2) \| Respond to of 10852

All: I believe we need to revisit revenue and EBITDA forecasts made earlier this year by Readware and others in light of Loral's first half actual results. If one annualizes the results so far this year for SS/L, Skynet, Orion and SatMex, you would predict revenues of about 1300, 120, 60, and 50M$ respectively, for a total before intercompany eliminations of about 1530M. After intercompany eliminations, the net revenue is likely to be 1400M. Compare this to Readware's January 98 forecast (taken from the FAQ): SS/L=1860, Skynet=178, Orion=137, SatMex=133, C=25, net revenue=2273. We're way behind the forecast, for reasons I don't quite understand. Maybe he assumed T6, O3 and SM5 would be a lot earlier than now planned. It's clear SS/L is realizing a sales shortfall relative to predictions much worse than can be explained by a couple of cancelled Asian satellite orders. Looking at EBITDA, annualizing results to date yields a prediction of about 140M net of about 50M intercompany eliminations: SS/L, Skynet, Orion, SatMex will be at 77, 70, 3 and 40, respectively compared to Rware predictions of 138, 121, 35, and -37(!), respectively. Looking to next year, Skynet's capacity will be doubled, Orion's tripled and SatMex's increased by 50% compared to the existing fleet. If all that added capacity was available for a full year and sold at today's rates, revenues at Skynet, Orion, and SatMex will be 236, 182 and 76 compared to Rwares estimates of 372, 314 and 166, respectively. Regarding SS/L, I don't see the bookings yet that could be expected to drive next year's revenues up. Plus SS/L revenues from sales to Globalstar will start declining next year, and there's nothing apparent to fill that gap. So I'm afraid projections of SS/L revenues of 2.1B are substantially too high. With the assumption that all the revenue from the five new geos flows direct to EBITDA while SS/Ls revenue and EBITDA stays flat with respect to the annualized 1998 results to date, I'd expect EBITDA about 200M less than Readware's January estimate of 826M$ (without tinkering with his C and G* predictions.) Valueman and Readware use much more complicated models than I would attempt, but so far at least this year they're not tracking reality. I guess what's important to know is whether there's a transient factor at work that's driving down revenues from the high margin businesses with respect to what was predicted by the models, or do the models need to be updated. The above is not meant as a criticism of Readware or any contributor to this thread. Valueline also has published very high revenue forecasts: in April 98, it forecast 98 and 99 revenue at 1.8B and 2.25B respectively. Looking forward to critiques and improvements on the above, RS