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)
"everyone" is probably hyperbole.
This couldn't happen to a more deserving Rat Clymer than this creep. He enabled the ChiComs to have the technical ability to target American Cities with their ICBM's.
Quite true. I must admit I take some pleasure in seeing Schwartz, via Loral, take this big hit even as I feel a bit of sympathy for the shareholders who may not have known about the China connection.
Still, loosing money, even lots of money, is no substitute for the justice that Schwartz deserves. For that lack of justice we ought to acknowledge the failings of our AG.
Blame Democrats, they did it. What is Ashcroft to do? Find Mark Middleton where ever he is in the world and have him plead the fifth again?
Been following the LOR boards for almost 4 years now. Believe me, they knew and know. All the way down, up and back down, they've been sure Bernie was going to do something to pull it all out.
He ruined many lives. The boards have been sickening to read.
You go ahead and believe that, you just might be in for surprise one day.
I feel sorry for all the good people sucked up in Loral. They should abandon ship like a rat on the Lusitania!
After 20 years of listening to a bunch of sniveling East Coast baby boomers crying about America while they snort their way to "enlightment"; our generation of younger, conservative people are fed up!
Mark my words... the next liars in the spotlight will be the HMO insurance companies. These medical groups are broke. They're propping up illegal contracts and false corporate tax statements with fictional goodwill, loans that are not backed, and fraudulent payments from insurers. The executives of medical groups and insurance companies need to wake up and smell the coffee.
Health insurers are dead in the water. Pacificare takes out huge loans to stay afloat. Wellpoint is lying about their bottom line. Aetna is requiring massive loans to resuscitate their HMO's. Health care rationing by "managed care" is dead!
Hillary sure did "reform" the system. Just look at the solvency of the major insurers and the fact that Gray Davis has overseen the disruption of BILLIONS of DOLLARS of losses in the California health care system.
That day will never come, because JW is FULL OF PEOPLE WITH INTEGRITY, including but not confined to Larry Klayman HIMSELF.
As for your assumption that I am in a "rebellious phase", YOU don't know what you are talking about. I am actually quite a tame girl, you know, and not impetuous at all.
Yep. The gov't/SEC needs to watch this carefully. And, although in a just world, what Schwartz/Clinton did would have landed them both in the GAS CHAMBER, I hate to see crucial technology businesses (and their employees) suffer harm.
For you and many other posters trashing Loral on this thread, I've stated before that Bernard Shwartz, like many other CEO's of copanies contributing to the DNC, does not speak for the thousands of patriotic, professional, engineers, scientists, and others who work in the few remaining aerospace firms in this country.
I hope you realize that your wishing that the livelihood of many close associates of mine be terminated, regardless of political affiliation. Individuals who did not follow proper procedures wrt the China incident were either reprimanded or have long since departed. Three thousand dedicated commercial space professionals remain to suffer if your wish comes true.
In addition, I thought I would remind those that lose track of the details as the media headlines are continually repeated, Space Systems/Loral has had only one or two contracts with China over the last 7 years (one of which has never been delivered.) That constitutes less than 5% of the companies business. It is not repercusions from Clinton donations that has brought business to where it is. It is that, worldwide, there has not been a commercial geo contract let in over a year now. Domestic and foriegn customers have dried up in the current economy.
I don't pretend to defend Bernard. I certainly wish he were a repub contributor as opposed to the other way around. But as a former Naval Aviator, veteran of the Gulf War, current reservist, patriot, and for the last 7 years an design engineer working for a satellite manufacturer myself, I found your comment to be, well, hopefully not intended for me. Having had my say, maybe you might reconsider your wish.
Regards
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