Loral Slashes Forecasts, Shares Plunge

Reuters ^ | July 2, 2002 | Sinead Carew

[anymouse]

Satellite communications firm Loral Space & Communications Ltd. on Tuesday slashed earnings and revenue expectations due to the drought in telecommunications spending, and its shares plunged by nearly 40 percent to a seven-year low.

Loral's debt also took a hammering as its bonds fell 20 cents on the dollar across the board, traders said.

The New York-based company, which sells satellites and satellite communications services, said it would not be able to achieve profitability in late 2003 as previously forecast, but dismissed analyst concerns it was headed for bankruptcy or delisting.

"We're not concerned about bankruptcy ... We're not aware of concerns about delisting," Loral Chairman and Chief Executive Bernard Schwartz told analysts on a conference call.

Although the company's share price has plunged well below the New York Stock Exchange $1 minimum trading requirement, Schwartz said the stock market also looks at sales backlog and operating and financial issues, which he said are not problems.

Loral shares were down 34 cents, or nearly 35 percent, at 64 cents on Tuesday afternoon, off an earlier low at 60 cents. Its shares have fallen by 68 percent so far this year.

The company, which has been hit hard by a slump in telecommunications and a downturn in satellite demand, did not indicate how soon it foresees profitability.

Vijay Jayant, an analyst with Morgan Stanley Dean Witter, said the company's earnings warning heightened his concerns about Loral's liquidity position.

"Managing growth and liquidity has always been my concern with Loral," Jayant said. "What happens in 2003? How are they going to run their business?"

Loral said it still expected to end the year with $80 million to $90 million in cash and available credit after capital spending of $160 million.

"All our covenants are covered," Schwartz said, in response to analyst concerns about Loral's ability to meet its debt covenants. "We don't think it will be a bumpy year (regarding) covenants ... As the economy improves, we should improve."

The company said it now expects a full-year loss of $190 million, or 50 cents a share, compared with its previous forecast of a loss of 40 cents to 50 cents. The new estimate includes a charge of 11 cents per share related to preferred securities but excludes a goodwill charge.

Loral posted a loss of $276 million, or 86 cents a share, in the previous year.

BLAMES MUCH OF SHORTFALL ON ITS SKYNET BUSINESS

Loral said it expects revenue of $1.2 billion for 2002, a 15 percent increase over last year but lower than its previous forecast for a 20 percent increase.

The company blamed much of the shortfall on its Skynet satellite services business, which it said has been hurt by the economic slowdown and delay in demand for new applications and services, especially high-speed data services.

Loral still expects revenue from its satellite manufacturing business to increase 20 percent based on expectations that satellite construction will pick up later this year.

But that recovery has not yet materialized. Loral said only one order was placed across the industry for construction of a new commercial geosynchronous satellite in the last nine months, compared with a total of 25 orders during 2001.

William Kidd, an analyst with Lehman Brothers, said, "Although the manufacturing business is large, Loral's equity story is driven by the satellite services business. The fact that the Skynet guidance is so much weaker is pretty disappointing."

Loral said earnings before interest, taxes, depreciation and amortization, or EBITDA, would be down about 5 percent from 2001's $223 million, compared with previous expectations for a 15 percent increase. Analysts on average were expecting EBITDA of $271.1 million for 2002, according to research firm Multex.

Loral now expects Skynet revenue in 2002 to decline to $340 million from $389 million in 2001, contrary to expectations for single-digit growth. Skynet EBITDA is expected to decline about 15 percent from $276 million last year. (with Yukari Iwatani in Chicago)

[dennisw]

Get real. Larry Lied only cares if a Jewish person is involved. Whether it's Loral or what have you. Maybe he used to be different but that's how he is these days.

He is Jew obsessed. I don't care much if you don't notice this. Many others do.

[MeekOneGOP]

[Redleg Duke]

Yep. Once his sugar daddy left power, his link to the ChiComs evaporated and with it the profits.

[anymouse]

Rather like all useful idiots, Swartz and Loral were "dumped on the side of the road," when the ChiComs could no longer use their influence with x42 to funnel missile technology through Loral.

Notice that Motorola and Boeing are suffering similar fates, when they became useless (exposed) for transfering missile/satellite tech to the ChiComs.

There is probably a long list of technology companies in many key areas that were used by the ChiComs (with full cooperation of x42 and the DNC) as strategic technology syphons and then later dumped into chapter 11 under the cover of the bursting of "tech stock bubble bursting." I wonder if anyone will do a comprehensive case study of the ChiComs' (and x42/DNC's) involvement in the failure of many of the US technology darlings now trading below $1/share? It might make an interesting book.

[Alamo-Girl]

Your analysis sounds correct to me!!!

[Ragtime Cowgirl]

Thanks for the ping, Patriot, I missed this.

The DLC (Dem. Leadership Council....Clinton, Gore, Lieberman, Edwards...Enron, Citigroup, etc...) board of trustees is an elite body whose membership is reserved for major donors, and many of the trustees are financial wheeler-dealers who run investment companies and capital management firms--though senior executives from a handful of corporations, such as Koch, Aetna, and Coca-Cola, are included. Some donate enormous amounts of money, such as Bernard Schwartz, the chairman and CEO of Loral Space and Communications, who single-handedly finances the entire publication of Blueprint, the DLC`s retooled monthly that replaced The New Democrat.
How the DLC Does It, big old Dem.-Wall Street PAC that takes credit for sending Clinton from Arkansas to DC...5 tiers of corporate sponsorship...but they refuse to disclose donor $$$. The press...no comment.