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

To: RMiethe who wrote (5434)	3/5/1999 10:42:00 PM
From: brian h	Read Replies (1) \| Respond to of 10852

RMiethe, Thank you for providing the report for us. Is it possible to bring the other three reports also. Welcome to the thread. TIA, Brian H.

To: RMiethe who wrote (5434)	3/6/1999 10:39:00 AM
From: Valueman	Read Replies (3) \| Respond to of 10852

RMiethe: As a view to the sat broadband market in the new millenium, Readware's piece is excellent. What does it mean for Loral? You say: My interest is the discussions that move markets, some here are pretty good. The 2002-4 success of Skybridge will have zero impact on today's tired Loral investor. Having held for 3 years now with serious relative underperformance, a Loral investor is not likely to be so set on being an even longer term investor. Loral at the onset held great promise, with a management second to none. They have built quite a satellite industry conglomerate in that time. However, promises made during that building phase have not come to fruition. Orion has been a huge disappointment. SS/L has not come close to stated goals, with Skynet below plan as well. Value added services have not added value. Accounting according to Loral has clouded results. G* has been a drag as Zenit brought the business plan down, and management stumbled and fumbled through a non-existent contingency plan, and a US government bent on doing everything by the book now. What does all this mean NOW? Why do I continue to hold? I think management, despite being a bit long of tooth, has continued to learn. They know they made mistakes. What we have seen recently has proven that they indeed can adapt. Let's look at the mistakes and solutions. ---Orion-From the date of acquisition, Orion has been nothing but a debt laden drag. The November 1997 estimates were for $137 million in revenues, $35 million EBITDA off of Orion 1. Those numbers were more like $80-odd million and somewhere between zero and $5 million EBITDA. What to do? Shake things up. That is exactly what management has done. Fold it under a more expertly run Skynet. Accentuate the data expertise. Use Orion as an extension of Skynet's basic FSS business. Throw in Cyberstar as part of the data-centric services. Let Skynet sell the services. Infuse new technology like DVB to lower costs and increase security. Position Orion as a company with expertise in internet by satellite. As the internet has mushroomed, they have focused their efforts there. It appears to be paying off. Orion 1 has a utilization rate now that is close to booked. Orion 3 will be launched with a pre-booking rate that is most impressive for an Asian satellite. Why? Internet connectivity. OzMail is a great example. The Natelco deal in India another example. Let the economy recover in Asia and watch internet traffic there explode. Orion3 is ready. It also appears that Orion2 may get a new home if its spat with Eutelsat continues and they win the Brazil slots. Adapt and prosper. --Cyberstar-This one needs work. What is the plan? It has been folded into Orion, which is folded into Skynet(do you see a pattern developing here?). They had expected to do over a $100 million in 1999. That has dropped to $30 million contingent on pilot programs evolving into real revenue streams. It is an obvious case of a service company having to convince customers that they need the service. As for the C* sats joining Skybridge in 2002, you would have to convince me. C* sat development work is far from active. If it were my duty, I wouldn't go forward either until I saw demand developing. If you can't make two transponders on Telstar 5 work for you, no use launching high powered spot beaming, space switching, frequency reusing 20.20's. So, I agree with management's move to slow development(cut development costs) until the future is a bit more clear. Perhaps the concept of C* is best handled by the current sat inventory until demand dictates otherwise. --Skynet has been a bit short of revenue projections, but mainly because Telstar 6 was delayed. As Readware noted, a delay to assure quality is good management. So, T* 4&5 are booked. Take a look at www.lyngsat.com --those charts for 4&5 are things of beauty. Despite a bit of over-reliance on pornography, these sats are smokin'. RAtes are up, revenues are up, EBITDA is up. All good trends, with a new sat in orbit, and one more to come in June. Pre-booked at excellent levels and likely to book up completely quickly. We should raise our glasses to Terry Hart. To heck with John Glenn, Terry Hart gets my vote as #1 ex-astronaut hero(plus, he is the one who worked the IMAX camera in space--what could be cooler than that?). --SS/L-Asia was a shocker here. Three sats put on hold. Disappointing, but not a fault of SS/L itself. Now at full capacity, sats stacked on top of each other. There have been quality issues--not nearly to the Hughes' level, but still blatant screw ups. I am confident that procedures and people have changed at SS/L to assure this will not happen again. We are not at expected revenue levels, but not too far off considering all that has happened. There is room at SS/L to shave costs and improve margins. Schwartz directed us to 8% for 1999. I can take that. Hughes is better, but I'll take a hit on margins if relaibility is better. --G-Ick. Our darkest days revolve around G, and our brightest days may also revolve around G. Management had no contingency plan--that was obvious. Did they correct that mistake? Oh yes. It will cost us, both now in dilution and later in returns, but they did correct it. The launch plan is now a statistical work of art. The sats will be up. The thinking around G is changing as well as Iridium pukes. Not a satellite constellation, but a telephone company. I hope the thought of G* disappears. I want Airtouch and Vodafone to offer "enhanced wireless communications" with global roaming, connections anywhere, etc. No need to say satellite phone. Let the engineers work in the background, keep the sats afloat, tweak and improve efficiency, etc. Let the service providers, proven masters of wireless communications, do the selling. I think that way of thinking is becoming the reality. That is a huge plus in my book. The big negative is the feeling I get that Loral is holding the cash back until G* is assured of financing. If that is the case, they are missing some sweet deals out there. I hope they are not refraining from acquisitions because of G*. --More thoughts later.