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Technology Stocks : Primestar/TCI Satellite (TSATA) -- Ignore unavailable to you. Want to Upgrade?

To: Bo Le who wrote (154)	1/10/1999 9:27:00 PM
From: Noel	Respond to of 442

I am not sure P* can wait around. If they can't put some kind of deal together, they will have to face the prospect of a declining sub base and a high rate of churn. Given the prospects, I would think a deal would get done, but the terms are the issue. I would think that it would be costlier for either DISH or DTV to convert P* subs than to acquire new ones... they'll just do it because it would be quicker for them to hit sub goals that way. Of course, things may be so bad at P* that the suitors back away, but otherwise Charlie Ergen might be the best friend P* has. At 1 1/2, it could be the time to take a risk and let your holdings ride, but the thing to remember is that bondholders get paid first before there is anything left over as equity, and with talk of a bondholder suit, there is probably not much keeping things together... I would recommend holding for 2-3 weeks and sell unless there is substantial news to warrant holding further. Of course, I am not a broker, and the standard disclaimer applies. You should do as much research as you can and then make your own informed decision. Good Luck! Regards, NOEL

To: Bo Le who wrote (154)	1/12/1999 9:27:00 AM
From: Noel	Read Replies (2) \| Respond to of 442

Bo: Here's what the market has to say about Primestar: ING Barings: Hughes Acquisition Of PrimeStar Unlikely Despite persistent rumors of a Hughes Electronics' takeover of PrimeStar, some analysts remain unconvinced. Noting the mid-power service's "excessive churn rate and high debt load," ING Barings analyst Rob Kaimowitz suggests that, "if there (is) any deal at all, we believe that there would have to be some formula that is based on the number of subscribers that ultimately do convert to DirecTV." He went on to say: Although it's believed that EchoStar has also bid for Primestar, Kaimowitz said he believes that it is likely a ploy by Chairman Charlie Ergen to bid up the price. An ING analysis indicates that TSAT's Tempo satellites are worth at most perhaps $250 million each (the in-orbit bird at 119 has significant damage on its solar arrays, so ING said this may be generous), and each subscriber is worth "NO MORE" than $750 a piece. "As we have written many times in the past, we think an acquisition of PrimeStar, without significant concessions from existing bond holders and share holders, is unlikely," he said. *PrimeStar's debt, churn and cost of conversion to high power makes an all out acquisition, at current levels, prohibitively expensive. According to ING, with total subscribers numbering 2.3 million, and debt at $1.7 billion, debt per-sub would be $739. The estimated conversion cost for each sub was estimated at around $500. When adding in debt plus sub conversion figures, total per-sub costs are at around $1,239. "However, we would not believe a PrimeStar subscriber is worth anything near $1,239 because of the company's 33 percent-plus churn rate," Kaimowitz said. "Excluding acquisition costs, our models indicate a value closer to $700-750."