DISH

Call it a case of bad timing. Echostar Communications Corp. introduced its portable media player Oct. 11, right around the same time that Apple took all the headlines with its new video iPod. Would Echostar have been able to get some more attention if Apple did not announce its product that day? Possibly. But those that follow Echostar likely knew the Pocketdish device was coming, and any enthusiasm over this product was not reflect in the company’s stock price.

The day the Pocketdish portable media player was introduced, Echostar’s stock actually dropped 43 cents to close at $28.60 per share. The value continued to decline throughout the following two trading days, closing Oct. 13 at $27.81. From a big-picture perspective, the inching down of the stock price should not necessarily be a surprise. Echostar’s value has been slipping for the past month. The stock dropped below $30 Sept. 17 and has not hit that mark since.

One reason that investors may not have jumped on the bandwagon with the announcement of Pocketdish is that it typically takes time for new consumer electronics products to gain traction in the market. It could be a while before the Pocketdish brings a material impact to Echostar’s bottom line, assuming the product takes off like some observers predict it will.

Another reason that may have investors eyeing Pocketdish warily could lie in the design of the two higher-end models. Echostar will be touting the ability to download content stored on digital video recorders, but the pocketdish is not exclusive to Echostar and can download video from other sources, creating an interesting double-edged sword. It makes the product a mass-market product, giving users the flexibility to use it however they want, which could help drive sales. But on the flip side, it means the product may not necessarily be a driver for subscriber growth because users will not need a Dish Network subscription to take advantage of the device.

XMSR

The announced bankruptcy of Delphi Corp., the largest supplier of radios for XM Satellite Radio, seems to have generated a slightly negative impact on XM shares, though the full impact of the bankruptcy remains to be seen.

The mood right now seems to be “wait and see.” Delphi’s satellite radio business is a profitable part of the company and that should keep Delphi moving forward with the business despite of the difficulties the automobile component manufacturer is facing.

That being said, one area where a near-term hit could be felt by XM is in new product development. Robert Peck, analyst with Bear Stearns, noted in an Oct. 14 research report that “Delphi has traditionally been the innovator in the market, being the first to market with the smallest satellite radios as well as the first truly portable satellite radio. … The risk, we think, arising from the bankruptcy process is on the development of new products, especially if the process is prolonged and management attention is significantly diverted.” With United Auto Workers union members already talking to the media about striking as a result of certain actions by Delphi management, a prolonged process certainly remains a possible avenue this bankruptcy proceeding could take en route to final reorganization.

XM’s stock has been inching down since Delphi’s Oct. 8 announcement. XM closed down Oct. 10, the first trading day following the announcement, though it should be noted that XM’s stock was on a slide dating back to Oct. 4 when the stock closed at $36.41. Given that it was already dropping, the Delphi announcement probably did nothing to stop that skid.

Peck noted in his report that along with the Delphi bankruptcy, other factors are likely contributing to XM’s decline, including third quarter subscriber numbers that were below consensus expectations, the high cost of driving that could push people to defer the purchase of satellite radios and looming issues with royalty payments to the recording industry, as well as copyright infringement concerns over the portable recordable satellite radio device.

CMI.V

C-Com Satellite Systems Inc. kicked off the third quarter earnings season Oct. 12, reporting a profit of Cdn. $86,000 ($74,000) in the third quarter 2005, up from Cdn. $24,000 ($21,000) in the same period in 2004. Revenue for the company’s most recent quarter, which ended Aug. 31, was Cdn. $1.5 million ($1.3 million), up from Cdn. $1.3 million ($1.1 million) in the third quarter 2004, C-Com said. The company credited the gains to increased sales of its Inetvu Mobile platforms.

The increase in revenues and earnings was likely the main contributor to the slight increase in the company’s shares, which are traded on Toronto’s TSX Venture Exchange. The stock closed gained Cdn. 6 cents (5 cents) throughout Oct. 12 and Oct. 13 to close at Cdn. 51 cents (43 cents). Overall, C-Com shares have been gaining ground since closing Aug. 15, at Cdn. 30 cents (25 cents).

The company also posted profits in the second quarter 2005, earning Cdn. $53,000 ($44,872) in its second quarter on revenue of Cdn. $1.3 million ($1.1 million), suggesting that the company’s decision to let word of mouth do the selling rather than take on debt to finance a marketing campaign (SN, June 27, p. 10) is working in terms of increasing profits and revenues. The downside of that strategy is it could take a long time for C-Com to earn significant profits, leaving it stock to go relatively unnoticed in the grand view of investors.

Eutelsat

In the coming weeks, coverage of Eutelsat Communications will begin in the Orbiting Wall Street column as the company joins the ranks of the Satellite Industry IPO Class of 2005.

Eutelsat announced Oct. 11 it would offer up to 77.9 million shares in an initial public offering on the Euronext Paris exchange. The offering represents about 38.8 percent of the capital stock and voting rights of Eutelsat, with a maximum of about 56.4 million new shares to be issued.

Shares are priced between 15.25 euros ($18.29) and 17.75 euros ($21.28) for both the international offering to institutional investors and the retail offering in France. The retail offering in France is expected to close Oct. 24, while the international offering is scheduled to close Oct. 25, though Eutelsat said it could be closed sooner. The pricing of the offering is expected to occur Oct. 25 and trading on the exchange is expected to begin Oct. 26.

Net proceeds from the offering, estimated at 824 million euros ($987.9 million), will be used to pay down the company’s debt in order to provide greater financial flexibility.