Khai, I can't give you "advice," since I'm not an investment professional, but I can give you my personal opinion. SS/L has been a marginally profitable business for many years. A lot of this was due to the lax attitudes created by the knowledge that if things didn't go well, deep-pocketed Ford Motor would bail them out. Now, the ownership has changed, and the market has changed as well. For example, no longer is a three year development to launch time acceptable. I think that SS/L is responding well. They have changed their development approach from program-centric to product-centric, they have implemented a sophisticated management tool call MRP2, and they are coming up to speed. Bernard Schwartz is a very sharp guy. He has an accounting background, but from what I hear he picks up on the technical stuff very quickly. And he is a demanding CEO, as well. People at SS/L know that if they screw up too badly, Mr. Schwartz will give them the ax. He loves to make money, and he wouldn't have held on to the space business if he didn't think that's where the money would be in a few years.
If you look at the business plan of Globalstar, you will see that if they only make half of the money they are forecasting, it will be a very profitable venture.
But the risks are great. One failed launch for Globalstar would be a recoverable event. That's one of the reasons the initial contract was to buy 56 satellites (the G* constellation only requires 48 birds). But if two of the big launch vehicles (carrying 12 satellites each) should blow up, even the additional eight satellites Globalstar is considering buying will not be enough to fill out their constellation.
Nevertheless, I think the risk is worth the potential rewards. As others who post to this forum have speculated, I would not be surprised to see the stock double or triple in the next three to five years.
Good Luck,
Eduardo
p.s. Yesterday I increased my 401K exposure in LOR to over 40%, and my 401K makes up virtually all of my stock holdings. |
