I love LOR stock. I think it has tremendous potential, but I would caution you on your analysis of just what it means to have a backlog of 70 satellites. Up until a few years ago almost all of the systems SS/L built were birds valued at $100M+. Today, 56 of those 70 satellites are Globalstar satellites worth somewhere between $13M and $24M (Please don't ask me for a more specific number, the answer is very political.) Further, SS/L's participation in the manufacture of the G* satellites is only about 20%. Their main job is to act as a project manager. They facilitate and manage all of the large subcontracts, and they do their best to keep the customer happy and contribute their share to corporate profits.
Even so, the balance of their backlog is very impressive, bigger than I have seen is my previous seven years with the company.
Just a note on the AT&T satellite failure: some people have speculated that this loss would hurt LOR. I dunno. As I recall, several years back, an Ariane Rocket carrying a very expensive Superbird B satellite blew up. What result? The customer ordered two more satellites! If AT&T is going to be in need of another satellite to replace the one it lost, not only will it have to lower its selling price to LOR, but it may just select SS/L as the replacement contractor. This might turn out to be double good news for LOR in the long run.
Eduardo |
