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

To: Bernard Levy who wrote (5669)	4/1/1999 8:19:00 AM
From: Valueman	Read Replies (1) \| Respond to of 10852

Bernard: I would think ICO would find it impossible now to raise the cash they need unless their partners were willing to cough it up. I doubt that. So, they are likely in a difficult way right now. There is absolutely no trading interest in the ICO bonds right now, and they yield in the range of 26-30%. Thus, Ellipso et. al. don't have a prayer. The delays are good for current players. Back of the envelope calculations. Each share of Loral when you deduct G* is worth approximately 9.5. That gives Loral a market cap of $2.7 billion, or $3.1 billion fully diluted. Back out that "oh-so-popular" but "oh-so-wrong" 1X sales figure for SS/L, and that leaves approximately $1.2 billion. Each satellite-Telstar 4, 5, and 6, Orion 1, and Orion 3(I'm an optimist) is worth $250 million, but we'll give them a value of $200 million. That's a billion there. Throw in Telstar 7 and Orion 2 in their various stages of completion and you are over the asset value being placed on Loral now. But wait--throw in half of SatMex's three sats, Europe*Star, Data Services, CD Radio, Agila II, Brazil Slot, all the other orbital real estate, etc. But wait again, that is simply an asset valuation. These assets produce cash flow. Put a value on that stream as well.

To: Bernard Levy who wrote (5669)	4/4/1999 1:35:00 PM
From: JMD	Read Replies (4) \| Respond to of 10852

Bernard, that's a fascinating line of inquiry you raise. Permit me to paraphrase to see if I've "got it". The thesis is that Wall Street is slinging $$$ at the Qwests of the world, driving their market caps to extraordinarily high levels. Put another way, this has made, and will continue to make, it very expensive for the investment community to get a good value to "play" the fiber optic segment. Meanwhile, the satellite stocks are in the dumper, making them a relative bargain to "play" the global interconnectivity game, notwithstanding that it's not via fiber. Fair enough? Well, here's my concern. Wall Street's profligacy has given Joe Nachio a War Chest of very cheap currency in very huge dimensions which might PERMANENTLY alter the "mix" between fiber and satellite as regards their respective share of carrying communications traffic. The same phenomenon is going on, IMO, with the internet stocks. Yahoo and Amazon ain't dumb: they know their stock prices are beyond absurd. But in the interim they're using that hyper inflated currency to capture REAL assets, primarily market share. So when the bubble bursts, as it inevitably will, they will still wind up with something valuable, indeed irreplaceable. Something that late comers might well be permanently denied. In other words, your thesis might well be correct and sooner or later we can expect bargain hunters to shift their capital outflows back to the satellite segment, a kind of bandwidth arbitrage. But my fear is that the industry, taken as a whole, will have been fundamentally altered by this "temporary" value disparity. You can overcome a lot of fiber's installation cost disadvantage when you can pay for digging the trenches with one dollar nickels. And of course when you're done, you've got bandwidth capacity that the birds can never touch. I'm well aware that the satellites have a role to play and certain advantages that cable can never touch, but might that role be diminished by the current market mania? Kind regards, Mike Doyle