(11/24/00 1:46:38 PM PT)

GREENWICH, Conn. -- PanAmSat Corp. said a backup satellite has ceased operations in yet another malfunctioning glitch facing the beleaguered communications concern.

The world's largest commercial satellite-services company said an onboard system responsible for controlling the spacecraft and maintaining its position relative to Earth had failed. PanAmSat doesn't expect the satellite to resume operations.

PanAmSat (SPOT), which is 81% owned by General Motors Corp.'s Hughes Electronics Corp. (GMH), doesn't expect the loss of Galaxy VII to hurt its projected revenue of about $1 billion for 2000 or its financial outlook for 2001. The company didn't provide its 2001 outlook in a statement issued Friday.

Analysts surveyed by First Call/Thomson Financial expect the company to earn seven cents a share in 2001. A year earlier, it earned $122.2 million, or 82 cents a share, and posted revenue of $810.6 million.

PanAmSat intends to file an insurance claim on the satellite, which is fully insured at a value of about $130 million.

The Galaxy VII, built by Boeing Co.'s Boeing Satellite Systems Inc. unit, is a backup satellite that provides occasional services in the U.S. Its backup spacecraft control processor failed on Nov. 22. The satellite's primary processor failed in June 1998.

The Galaxy VII problem is the most recent in a series of manufacturing errors, design oversights and defective components that have afflicted Hughes satellites during the past few years. PanAmSat, which is in the midst of an aggressive expansion push, has been forced to reshuffle its launches and orbits three times since 1998 to compensate for those satellite-manufacturing problems.

In late September, PanAmSat said a problem with its Galaxy VIII-i satellite could cost the company nearly $500 million in revenue and accelerated depreciation. Because of that problem, Galaxy VIII-i, a three-year-old satellite providing direct-to-home video broadcasting to Latin America, is expected to stop operating after only five years, or by the end of 2002. It had been expected to last 15 years.

In late September, PanAmSat disclosed that propulsion problems with the Galaxy VIII-i, a three-year-old satellite providing direct-to-home video broadcasting to Latin America, could cost the company nearly $500 million in revenue and accelerated depreciation. Instead of lasting 15 years as PanAmSat had envisioned, the satellite is expected to stop operating after only five years, or by the end of 2002.

PanAmSat has said it is looking to its data and Internet initiatives to fuel long-term growth.

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-- Doris (nocents@bellsouth.net), November 27, 2000