$32.73
-0.88 (-2.62%)
Loral Space & Communications Ltd. (LORL)
CAPS Rating:
A satellite communications company with substantial activities in satellite manufacturing and satellite-based communications services.
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not exactly sure about this but here's my thesis:1) Backlog for satellite construction is over $1.5 billion2) Construction is low margin for these guys, margins on services are HUGE.3) As backlog is converted into finished products, servicing of these products should increaseAgainst a enterprise value of $600 mil or so, technically their services division alone can be worth at least $400-500 mil consider 0 future growth!
LORL problems are potentially more severe than I thought. The evidence is potentially in the creation of Telesat.Telesat holds a considerable amount of the co's backlog, LORL own's majority of the shares but has minority voting power, and almost all future launches point to the Telesat subsidiary - which also has a good amount of debt on the books too.It looks as if the company may expect to make write downs on Telesat's behalf and save themselves of the embarrassment. PSP is a freakin pension fund and controls Telesat. They are effectively in charge of LORL's largest chunk of backlog (most is also netted out as eliminations, does that mean LORL has contracted the construction of those satellites?)Ugly, ugly, ugly, situation. This is not Wayne's World where "if you book them, they will come" strategies consistently work... yet here is what we have, done on a subsidiary's behalf (WHY!?!)With this, i'm ending my caps outperform and staying on the sidelines.