The Satellite News Financial Ticker

By | July 21, 2003 | Feature

Week of July 11 – 17, 2003
Percentage Change

Symbol
July 17 Price
One Week
One Month
Three Month
Year to Date
Operators
APT SATELLITE HLDGS ATS
3.25
(3.0)
55.5
153.9
89.0
ASIASAT TELECOM SAT
17.06
(1.1)
3.9
20.6
49.8
BRITISH SKY BROADCASTING BSY
44.13
(2.2)
(3.9)
6.1
10.2
ECHOSTAR COMM -CL A DISH
34.95
(4.0)
(3.7)
23.9
57.0
HUGHES ELEC (GM -CL H) GMH
13.38
(2.3)
1.6
20.5
25.0
LORAL SPACE & COMM LOR
0.40
(86.9)
(88.2)
(86.7)
(90.7)
NEWS CORP NWS
30.39
(0.9)
(5.4)
14.2
15.8
NEW SKIES SATELLITES NSK
5.25
7.1
(12.5)
16.7
26.5
PANAMSAT SPOT
17.48
(6.0)
(11.4)
9.0
19.4
PASIFIK SATELIT NUSANTARA PSNRY
0.15
3.6
70.6
(44.2)
(3.3)
PEGASUS COMMUNICATIONS PGTV
31.46
(2.8)
14.9
63.2
140.2
rSTAR CORP RSTRC
0.55
(1.8)
(15.4)
83.3
129.2
SES GLOBAL SES.LU
5.60
(0.7)
(3.3)
5.7
(12.5)
SIRIUS SATELLITE RADIO SIRI
1.67
(9.2)
(6.2)
146.0
160.9
XM SATELLITE RADIO XMSR
12.39
(3.4)
14.5
90.6
360.6
Operators’ Average
100.00
(7.6)
0.7
34.9
65.1
Manufacturers
ANDREW ANDW
10.58
(7.9)
11.4
70.6
2.9
BALL BLL
45.00
0.7
(8.6)
(19.8)
(12.1)
BOEING BA
33.17
(5.8)
(8.9)
24.5
0.5
COM DEV INTL CDV
0.47
(2.1)
(11.3)
14.6
(21.7)
EMS TECHNOLOGIES ELMG
16.06
11.0
19.5
35.2
3.1
GARMEN LTD. GRMN
39.75
(8.5)
(15.2)
2.2
35.7
GILAT SAT NETWORKS GILTF
5.55
2.8
51.6
23.3
(28.8)
GLOBECOM GCOM
3.92
6.5
24.4
42.0
4.5
HARRIS HRS
29.21
(5.7)
(7.4)
5.1
11.1
HONEYWELL HON
27.50
(1.9)
(3.9)
22.9
14.6
KVH KVHI
19.91
(16.2)
(13.4)
51.4
131.5
LOCKHEED MARTIN LMT
50.22
4.9
3.1
13.2
(13.0)
LUCENT TECHNOLOGIES LU
1.61
(18.7)
(24.1)
8.1
27.8
MOTOROLA MOT
8.94
(12.8)
1.9
14.2
3.4
NERA NERAY
1.64
0.8
7.1
72.0
51.2
ORBITAL SCIENCES ORB
7.70
(3.6)
10.0
47.2
82.5
QUALCOMM QCOM
35.69
(8.7)
6.0
9.1
(1.9)
RAYTHEON RTN
32.43
(0.5)
1.0
15.9
5.5
ROCKWELL COLLINS COL
25.19
(1.2)
5.9
28.5
8.3
SCIENTIFIC-ATLANTA SFA
25.00
(4.8)
3.8
72.5
110.8
SKY FRAMES SKYU
1.45
(9.4)
(23.7)
(3.3)
(81.9)
STM WIRELESS STMI
0.01
(50.0)
900.0
(97.5)
TITAN TTN
10.92
(0.8)
3.7
53.8
5.0
TRIMBLE NAVIGATION TRMB
24.47
(11.3)
(2.5)
16.6
95.9
VIASAT VSAT
13.55
(13.4)
(2.9)
6.4
17.4
Manufacturers’ Average
100.00
(6.3)
1.1
61.0
14.2
Nasdaq Composite Index
S & P 500 COMP
1,698.02
(2.8)
1.9
21.7
27.1
SN Stock Price Average SP50
981.73
(2.0)
(2.9)
11.6
11.6
100.00
(6.8)
1.0
51.2
33.3

Wall Street Analysis

By Tom Watts, SG Cowen Securities

DirecTV’s results this week showed further losses in the Pegasus Communications [Nasdaq: PDTV] and NRTC territories. While DirecTV-owned subscribers rose by 181,000 to 9.94 million during the second quarter of 2003, subscribers in the Pegasus and NRTC territories fell by a combined 45,000 to total 1.6 million. Impetus is rising for DirecTV to fix the NRTC-Pegasus problem.

The natural fix is for DirecTV to buy Pegasus and the NRTC’s rights. Even though an asset purchase appears more likely, we have analyzed what DirecTV could do to acquire Pegasus as a whole. The value and mechanism of a buyout also encompasses much uncertainty. With debt representing nearly 90 percent of Pegasus’ $1.7 billion enterprise value (EV), Pegasus’ equity value is almost irrelevant.

Our quick analysis shows Pegasus trading for 8.7 times 2003 EV/EBITDA versus Hughes Electronics valuation of 11 times EV/EBITDA. This difference suggests DirecTV could pay above today’s $31 a share price for Pegasus. However, since debt and preferred shares makes up 90 percent of Pegasus’ enterprise value, the share price paid has almost no impact on the value of the transaction. For example, paying $50 per share instead of $31 would only raise the value of the total transaction by 6 percent. Paying $0 for the equity would only lower the value of the transaction by 10 percent.

Value, however, will be determined largely by the lawsuit among the parties that would resolve the NRTC’s renewal rights and the rights to premium programming, among other things. With the trial scheduled to begin July 29, it may be many months before the court delivers a verdict.

The question is whether DirecTV will take out the debt at par value or at a discount. The debt value of Pegasus also will be determined largely by the trial outcome. Until a verdict, market share losses may continue in NRTC areas, to the benefit of rival EchoStar Communications [Nasdaq: DISH] and rural cable operators. As a result, look for strong net new subscriber additions of roughly 275,000 at EchoStar when it reports second quarter 2003 results.

Tom Watts is a managing director and satellite analyst at SG Cowen Securities. He can be reached by phone at 212/278-4260 or by e-mail at tom.watts@sgcowen.com. Readers should assume that SG Cowen Securities Corp. and/or its affiliates intend to offer services in investment banking to the above referenced companies within the next three months, and to seek compensation for such services.

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