Every moron who fights the jostling crowds dreams he’ll find the pot of gold — that one spectacular product for buying and for investing.
My nugget after an exhausting day trudging among 3,100 exhibitors and 130,000 attendees is … drum roll — ViaSat.
The company has just launched a huge satellite that will do fast satellite-to-ground and satellite-to-airplane Internet service.
How fast? I tested it last night using my very own laptop that I schlepped around the Consumer Electronics Show (CES) in Vegas. I tested ViaSat twice. Both times I got a speedy 10 million per second download and two million bits per second upload. That compares with my Samsung/Verizon 4G/LTE MiFi unit (see right column) which gave me 3.86 Mbps down and 5.58 megs up. I want ViaSat for my country house which can’t get the Verizon service and is suffering with miserable landline phone company DSL service at 0.8 megs down and 0.3 megs up. I also want to use ViaSat on planes, because it will be much faster than GoGo. I came out on JetBlue which has DirecTV, but no Internet service. It will later this year with ViaSat.
So, I like and want the ViaSat service. (It’s called exede.) Do I want the stock?
Or am I too late? I hear on the grapevine that master investor Seth Klarman bought a big chunk of ViaSat a while back at much cheaper prices.
ViaSat’s present metrics stink. Price/earnings ratio is a high 35. Revenues are only growing at 16% and net income has barely moved in five years.
But… and this is the HUGE “but” — they’ve just launched this spectacular, huge satellite, with oodles of potential customers — airlines, rural customers who can’t get any Internet service for love nor money (except dial-up) and the disadvantaged — like me in my country palace with its tranquility, nice views, high taxes and ultra-awful Internet service.
I did the math. The satellite’s capacity is 1.5 million customers. Each will pay a minimum of $50 a month. Multiply that out and you have an extra $900 million of revenues to add to the present $800 million and you’ve more than doubled the size of the company and probably done much more to profitability. You can see what attracted Mr. Klarman (he’s the one whose out-of-print book on investing sells on eBay for thousands of dollars). He was smarter and earlier than me.
Now what? Wait for a pullback? Dip one’s toes in? Good questions. I’m mulling. It’s 5:00 AM in Vegas. My brain is a fog. I don’t handle jet lag well. The “fly in the ointment” — there’s got to be a better metaphor — is that ViaSat launches it nationwide service next Monday. That should wake every sleepy investor and push ViaSat (VSAT) up even further. By the way, the dip in the chart in the summer of last year was speculation that the company’s satellite was late, wouldn’t be launched, would blow up — usual nonsense. It’s up. It does work. I’m excited.
This is a photo I took last night of the ViaSat satellite antenna which, I hope, will soon sprout on 1.5 million households. This is the antenna I ussed for my successful test. The deal is you pay $150 for the antenna, the modem black box you have inside, and installation. Then for $50 a month you get ViaSat service of up to 7.5 gigabits per month or up to $130 a month for 25 gigabits.
ViaSat will bring decent Internet service to farmers and the disadvantaged. They should do well.
The rest of CES? I’ll give you more tomorrow morning. For now. I’m going back to bed.
The magician and the cruise ship. Today’s pathetic “joke.”
A magician worked a cruise ship. The audience was different each week so the magician did the same tricks over and over again.
There was only one problem: The captain’s parrot saw the shows each week and began to understand how the Magician did his tricks.
Once he understood, he started shouting in the middle of the show, “Look, It’s not the same hat!” or, “Look, he’s hiding the flowers under the table!” Or “Hey, why are all the cards the ace of spades?”
The magician was furious but couldn’t do anything. It was the Captain’s’ parrot.
Then one stormy night on the Pacific, the ship sank, drowning. The magician luckily found himself on a piece of wood floating in the middle of the sea, as fate would have it … With the parrot.
They stared at each other, but did not utter a word.
This went on for a day… And then two days. And then three. Finally on the fourth day, the parrot could not hold back any longer and said…
“OK, I give up. Where’s the ship?”
Harry Newton who will give you a hint of two great products he found at CES:
Samsung’s new OLED TV (out later this year) and the Samsung Focus S cell phone running a most marvellous software called Microsoft Windows Phone. This software will give the iPhone a serious run for its money. This morning I want to look at the new Nokia running Windows Phone and the speedy Verizon 4G/LTE. It’s apparently ultra-neat.
I have lived on a tropical island with Hughes satellite service. As
Pahowley stated, the biggest problem is marketing. Reaching the folks in sparse markets is tough. The second major problem is finding installers and maintainers. DirecTV has their own folks in a terribly expensive operation that they can only justify by repeated sales of movies and special services over years. How is ViaSat going to “twist-up” their customers to provide a revenue stream that can support a very far-thrown service and support network?
Invest in a satellite company? Think I've heard this one before.Super fast service; think I've heard that one before, also (if you can ignore delay). Serve rural customers; think I've heard that one too, plus isn't the government spending a few billion to do that, at least here in the US? And put up $150 to start; maybe a little high for rural folks, many of whom I used to serve? Double revenues; maybe get price/earnings to 15 or stay at a dangerous 35; then what (though at 35 that would be phenomenal news)? Serve the airlines; think that's been done (but, slowly making me wonder about demand) so will faster speed change them? And the challenge of challenges, in my experience, is how do they reach this giant market, somewhat wealthy to afford it and spread over a vast area? And certainly steep prices for undeveloped and emerging countries where cellphones are exploding. Developed Europe and Asia with their high densities generally already have very high speeds. So I'm a skeptic.
I love the concept and the raw broadband power, along with its “reach anywhere” ability. I just remember the wild enthusiasm for the early satellite services with, for their time, similar promises. My experience out on the farm a couple years ago with satellite service, all we could get for BB or cellular service, didn't dissuade my opinion. I hope they are a giant success, forcing the rest of the telecommunications world to upgrade and match them. Just not sure as an investment.
Harry,
As always I find your writing, entertainining and useful.
When checking the new windows phone, could you ask for us potential investors in Microsoft what protections they have included to avoid computer virus' and the like? If secure, I think these phones could have a real selling point in addition to neatness. I use the iPhone because I wanted to reduce potential for being hacked when trading a stock on my phone. Rim was supposed to be secure too, but browser was aweful. C
Ron
Harry, on the subject of companies to short. What is your opinion of EchoStar Corp (SATS), the parent of the satellite broadband provider Hughes Communications who's broadband offering is far inferior to the new ViaSat offering? Seems like they may be at a serious disadvantage to ViaSat's now.