I went through the same thought process before nibbling at VSAT yesterday (yes, I'm under water after today). I wondered how much potential revenue can come from the unserved/under-served with cell towers popping up all over the place especially in 3rd world countries. One could simply buy a wireless card for their laptop or tether your laptop to your phone's hotspot. The data plans are comparable to Exede plans in price, but some wireless plans include unlimited data usage.
Verizon is making a strong push towards providing rural areas with fast speed data services. I believe it's not too long before rural areas in America will all be well served when it comes to cellular data services.
I'm playing VSAT for it's military exposure and inflight wi-fi. Anything that comes from Exede is just icing on the cake.
It's crazy to think that in its current capped-bandwidth, high-latency incarnation, it could steal from any high-speed wired alternative. But the market size for un-served and under-served is enormous -- way, way bigger than VSAT-1 (plus VSAT-2 plus ...). They're going to run out of room on VSAT-1 no matter what happens with those customers. Unless you are looking out a decade or more, I don't think they even need to touch the FIOS/Cable crowd. (Instead, they can get unserved, under-served in other countries).
I would attribute it to unrealistic expectations that Exede would steal subs away from FIOS or high-speed cable alternatives.
The backlog was also a little light compared to recent quarters. I swear someone said something about uncertainty with orders.
To me it's pretty simple. Exede users who have no alternatives are pretty much locked-in. Users who only have a slow DSL alternative, have some churn. Those two groups are low enough churn that the economics are good. Users who have a fast cable alternative ... I don't understand why they'd ever want Exede. VSAT should be able to segment these out, and churn should drop. I don't really get the big drop today either, this is a solvable problem.
If you listen to the conference call, the issue is probably some disappointment over thin net subscriber adds, and higher than expected subscriber churn within the Exede business. They report that Exede is attracting some high volume former cable users who are then disappointed with the volume metering part of the contract. A matter of targeting the right customers and setting expectations.
The price drop today - wow - way overdone in my opinion. Exede is only a fraction of their revenue flow, and Viasat is already working the angles, but I guess the market is looking for a lot from it.
I own GOGO but has now messge board so I come to celebrate here. I just read an article on Bloomberg saying a contract with Jef Blue is coming soon. Good time to buy. WiFi on air is like a drug, you have to have it! Nice business to be in!
Looks like some key shareholders got wind of the next quarterly results before the market. Looks like since Nov 7. I wish the SEC would catch these folks.
And you don't even get a response. We used to have some of the best diligence writers on Yahoo. I recall the days of valueman2us, ebbjay, rationalist - those guys did a real service for all VSAT investors. Alas, I think Yahoo Finance itself is becoming a dinosaur, and those good minds have probably gone elsewhere.
The silence is deafening.