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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT
GSAT 61.62-4.7%Jan 30 9:30 AM EST
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To: CMon who wrote (5980)7/23/1999 11:40:00 AM
From: Rocket Scientist  Read Replies (1) of 29987
 
I agree with CMon that 8 cents/sh is meaningless w/o the usage assumption. I think it's clear that this is the approximate cost per minute for a fully loaded (10B cm/yr) system, based on following.

1. In a conference call a few months ago, an analyst suggested that G*'s fully loaded average cost/minute was nearly (slightly higher than) 10 cent. BLS corrected him and said it's high single digits.

2. If one looks at the Loral/G* overview charts avlble on Loral home page, there's a chart of breakeven vs subscriber count. They don't state on the chart the call minutes/subscriber year, but in other contexts I've heard 140cm/month average usage. 1M subscribers is said to provide breakeven, including operations, interest and depreciation ("replace the system"). At an average revenue of 0.4$/minute, 1M subs at 140 min/month is 0.7 B, or 7 cents/minute average.

3. It's not that hard to estimate G*s depreciation (over 7.5 years) and interest expense, based on it's SEC filings. I believe they total about 600M$/yr (the interest cost is likely to go down if the business is at all successful, BTW). That would allow 200M$ for operations expenses, to reach an averag cost of .08$/minute.
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