NSE & PA

Speculation on the Intelsat acquisition of New Skies Satellites Holdings Ltd. continues to grow. New Skies announced Aug. 25 it was offloading a couple of teleports in Australia for $10 million, a move observers say makes the company a more attractive takeover target to Intelsat. As this issue was going to press, Satellite News received a tip that the acquisition announcement was imminent.

The price of the sale, according to an Aug. 19 report in the Wall Street Journal, could be as high as $1.3 billion, or an implied per share price of $25, according to analysis by Vijay Jayant of Lehman Brothers (SN, Aug. 22).

The news of a potential combination pushed the price of New Skies shares to a historic high of $23.75 Aug. 19, up from a closing price of $20.50 the previous day. New Skies’ stock set its second record in as many days when it closed at $24.16 Aug. 22, before losing some of the gains throughout the trading days leading up to our publication date. The stock closed at $23.69 Aug. 25.

The movement of the stock suggests investors are expecting New Skies to sell but may not have faith just yet in the $1.3 billion price tag. If the sale is announced as expected, New Skies stock should climb to a per share range near the implied per share price of the deal. However, the stock may not climb much higher. Because Intelsat does not offer publicly traded stock that could be swapped for New Skies shares and bring additional value to the deal.

The recent bump by New Skies did not have any residual effect on Panamsat Holdings Corp. That company’s stock continued to hover near the $20 mark, gaining or losing no more than 9 cents on any trading day. As previously stated, we believe investors are sitting firmly in a comfort zone with this stock and it looks like a major news item will be needed to really move this stock.

SIRI

Typically, when a company has some good news to offer, it will not let that news potentially get lost among other announcements. Sirius Satellite Radio did not take that route, issuing several releases Aug. 25 regarding new products and services. Fortunately, what can be considered the most significant announcement of the day, the introduction of the company’s new portable device, did not get lost in the mix.

The portable radio, dubbed the Sirius S50, will allow users to store up to 50 hours of Sirius content as well as play MP3 and WMA files. The unit, which measures 1.9 inches by 3.9 inches by 0.7 inches, also features voice-assisted channel navigation. The Sirius S50 is scheduled to be available at retail this October with a suggested retail price of $359.99.

For the most part, the new device received some initial positive words from at least one Wall Street analyst. “Overall, we believe the device came in ahead of expectations,” Sean Butson, analyst with Legg Mason said in an Aug. 25 research note. He noted that the 1-gigabyte storage capacity is greater than XM’s MyFi but inline with XM’s forthcoming device from Samsung. The Sirius S50 also will be the first portable satellite radio device with a full color screen and comes in at 183 grams in weight, compared to the 205 grams that MyFi weighs.

Butson did offer one criticism: the price. “At $360, the device is 20 percent more expensive than XM’s portable line. Further, consumers must spend another $100 to purchase a home dock. For a device that requires docking for usage … we think the total price of nearly $500 will turn some potential buyers off.”

This and announcements regarding new, smaller plug-and-play radios and the launching of a traffic service pushed Sirius stock up only 7 cents, closing the day at $6.58. Perhaps investors shared the mixed response that Butson had in relation to the price, or perhaps investors were not focused on the announcements at all, as the stock more or less has been floating in the upper $6 range for some time. While the introduction of a portable device is good news, the real test for the stock is coming, as Howard Stern makes the leap to Sirius in January, The move could drive subscriber numbers the fourth quarter of this year and the first quarter of next year. If the gamble pays off and Sirius is able to bridge the subscriber gap between itself and XM, Sirius stock should respond accordingly.

WRSP

The downward spiral for Worldspace Inc. continues. After closing above its initial public offering price on its first day of trading Aug. 4, the stock has fallen off considerably. Worldspace stock has traded down every day since it closed at $20.04 Aug. 15, dropping nearly 20 percent throughout the next eight trading days to a close of $16.05 Aug. 26. Until the company gets out into the public with a clear vision of what the company’s plans are and instills some confidence that it can execute that vision in a profitable manner, this stock likely will continue to struggle.

ISAT.L

In its first financial report since going public in June, Inmarsat reported increases in both earnings and profits for the first six months of 2005, compared to the same period a year ago.

The company reported Aug. 23 revenues of $253.6 million in the first half of 2005, up 4 percent from the $243.5 million reported for the first half of 2004. Profits increased from $19.3 million to $42.8 million throughout the same period.

The maritime sector was the main driver for revenue growth, with Fleet services providing strong growth in revenue, traffic and terminals, Inmarsat said. Increased use of mini- M and Inmarsat-B maritime services also contributed to revenue growth during the six-month period.

Inmarsat’s land sector saw increased usage in the early part of the year following the tsunami in the Indian Ocean in December, though the company noted that it has “more recently seen some reduced activity from government and military users in the Middle East.”

Inmarsat’s stock did not see any dramatic shifts following the earnings release, closing up .02 pounds to 3.20 pounds ($5.76) Aug. 23. The stock has been wavering around the 3.20-pound mark since Aug. 15, reaching as high as 3.3050 pounds ($5.95) Aug. 19 and a low of 3.18 pounds ($5.73) the following day. It closed out this review period at 3.2550 pounds ($5.86) Aug. 25.