OTOT....Globastar and Gemstar
Unc: I also took a small position in Gemstar last week; could be to internet TV what AOL has been to dial-up internet connections.
Have also followed Globalstar after dicussing with Djane, and because it is related to Qualcomm, the latter being my single largest position (Rambus second). Globalstar is a satellite network in the making, using low earth orbit strategy (Iridium is higher orbit, I believe). Buying into Globalstar is a play on wireless communications, which is a segment of telecommunications that is exploding as wired communications growth slows. Obviously, the growth in wireless has to do with the need for more voice in underdeveloped countries and with the massive need for data transmission in the Developed countries. Globalstar, as I understand it, will be CDMA based, meaning that it will transmit using CDMA digital technology, whereas Iridium is using something else, which is less efficient at data transmission. So the advantages of satellite wireless is far-reaching data transmission worldwide, without having to worry about mountains, oceans, etc. The disadvantages is that sales of handsets and time will start mostly with international businessmen, a small market. Another disadvantage is that quality of transmission is uncertain, as it relates to obstructions like trees, tall buildings, etc. Globalstar looks to be getting there first with the best, but while its potential is great, it may take much longer to reach that potential than people think. Iridium's failures seem to have to do alot with bad planning, strategy, marketing, insufficient handsets, etc.
I didn't take a position in Globalstar, tho' I like it, because:
a. I don't have enough money to invest in everything I like,
b. Why invest in Globalstar, when I already have a wireless play that is growing earnings quickly NOW(big tornado; Qcom announces after market close tomorrow....can't wait); Qcom will benefit from Globalstar's roll-out by selling CDMA handsets, chips.
c. From the looks of it, Globalstar now is like Rambus in early 1998; getting in then might have been "too early". Same for globalstar now, IMHO. Would rather put working income into today's quality high-fliers, rather than some of tomorrow's potential high-fliers.
d. Gemstar is already profitable; but real profits could begin this year or next, as the Internet finds its way onto everybody's TV. FWIW, Gemstar is followed by 5 or 6 analysts; all have it rated "strong buy". So the street likes it.
Hope this helps,
Stan |
