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

To: Jeff Vayda who wrote (4336)	8/25/1998 12:49:00 PM
From: Renby Cage	Read Replies (1) \| Respond to of 10852

Jeff, Readwares 1998 valuation model had, I believe, Loral at 36 and G* at a split adjusted 36 as well. Considering G* exceded that number mid year and Loral fell a point or two shy, I don't think one can really criticize the model. He has always pointed out that those numbers are dependent on successful and timely launches, and there has been some delay that's crept in, pushing out projections at least a quarter into the future from say 6 months ago. When the stock goes down, the first to hear criticsm are the guys who have been the major proponents. I think readwares numbers have always been reasonable to conservative based on the best information available all sources considered. It may seem like he hypes the stock, but over the years it has become clear that he mostly just provides the most rational projections based on his extensive sources from "inside the industry". We are in a bear market. ORBI and IRIDF have taken similar falls from their highs, as well as the majority of tech companies, especially the ones with challenging earnings visibilty pushed out into the future. And this year is far from over, with 3 potential launches for G* scheduled, if even the first two get up there successfully before the end of the year, and the market doesn't punish much further, the year end projections may still be attainable. Renby Cage

To: Jeff Vayda who wrote (4336)	8/25/1998 1:10:00 PM
From: Valueman	Respond to of 10852

I won't comment on Readware's numbers, but remember that they have always come with exact assumptions, and many of these have not come to pass. Let's look at the Loral November 97 EBITDA estimates and see where they have come up short and why. SS/L $138 million Skynet $121 million Orion $ 35 million SatMex $ 52 million C* $(54 million) ---SS/L we've covered ---Skynet--I also worry that they are behind plan, but you can make the case that they will catch up. Telstar 4 came with contracts signed while part of AT&T, and the resulting liabilities to provide similar service when they lost the 400 series bird. In other words, Skynet was obligated to provide a similar service to users of that sat on the same terms. Thus, the prices they received were lower than fair market price. It is impossible to estimate what the difference in value is, and what amount of business is now occupying space on Telstar 4&5. Telstar 6&7 will not have that liability. These will be new contracts based on 98/99 rates. So, here we are at the halfway through 98 point with ~$57 million in revenues and $33 million in EBITDA. We won't make $178 million/120 million as was forecast, that is for sure. A simple doubling of first half results plus $15 million in Telstar 6 revenues gives ~$130 million. I would hope that second half book of business is better than the first, and Telstar 4 & 5 would contribute $70-80 million in revenues. There is no comment from the company on that. That gets you to a ~$150 million level. EBITDA margins were forecast to be 67% at year end. At 60%, you get $90 million in EBITDA. In 99, several of the value added services will kick in, which are supposed to increase revenue per transponder significantly. Also, remember that HDTV broadcasts begin in November this year, so ABC and Fox will need more transponders. I posted previously about using an average of $1.4 million/transponder in 99(vs. $1.2 million so far in 98) and getting $246 million in revenue, or nearly $200 million in EBITDA. That was adjusted down after seeing Telstar 7 launch pushed out to mid 99. More to follow