THE SECRET FILES OF JOHN HUANG
Posted on 07/02/2002 12:38:24 PM PDT by 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)
HILLARY CLINTON -U. S. SENATOR- IS A KEY DEFENDENT IN LORAL SHAREHOLERS CASE ie. CHINAGATE (11/1/01)
Goodness, you stole the exact words right from my keyboard. Heh-heh..
This comment sounds more like the Kiss of Death rather than the old days of ML where they would have put Lipstick on that Dying Pig, Loral, and tried to sell it to their dumb investors!
What a d**k.
Oh, I dunno. I think "I never had sex with that women" is pretty much the sine qua non of lying-fool disclaimers.
:-)
If it wasn't Loral, I would not cheer.But by now everyone who is in the stock is well aware of the ethics of the CEO.
That there wuz purdy gud!!!
Dave, this is one of the things that drove me half-crazy during "The Decade of Fraud(s)" in the nineties- America was sold down the river by the clintons and their pals in industry, the media, and entertainment- yet nobody seemed to care, or want to even talk about it.
I well remember Charlie Smith
on Mike Reagan's show detailing all the violations of national security. Bill Gertz & Kenneth Timmerman tried to point it out, over and over again. The Public just did not seem to care.
Pssst Gramps...lemme talk with my girl LGE and I'll git back to ya...MUD
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