Article on ABN-AMRO report on G* management projections
09/10 17:10 RESEARCH ALERT-Globalstar <GSTRF.O> sets targets
CHICAGO, Sept 10 (Reuters) - ABN-AMRO said Friday that global satellite phone
company Globalstar Telecommunications Ltd. was on target to begin service later
this year, and was shooting for 1 million subscribers by the end of 2000.
-- Globalstar aims to provide worldwide satellite telephone service via a system of
orbiting satellites. Its two main competitors, Iridium LLC <IRIQE.O> and ICO Global
Communications Ltd. <ICOFQ.O> filed for Chapter 11 bankruptcy protection in
August.
-- "While hesitant to do so, management projects 1 million subscribers, $650
million in revenue, 75 percent EBITDA margins, 160 average minutes of use per
month, and break-even performance by the year-end 2000," ABN-AMRO said in a
research note following an analysts' meeting with Globalstar and Loral Space &
Communications Ltd. <LOR.N>, which owns 45 percent of Globalstar. ABN-AMRO
repeated its hold rating on Loral.
-- "While the meeting was positive, management was hesitant to make firm
projections for most of their business units," ABN-AMRO said. "All systems are 'go'
with formal service launch likely in October or November. Somewhat disappointing,
this is slightly behind the anticipated September plan."
-- ABN-AMRO said meeting participants were invited to test the satellite phones. "We
were impressed by the voice quality, call completion and retention success, and
absence of voice delay," ABN-AMRO said, adding that voice quality was of better
quality than a traditional analog cellular phone. "While this was certainly a small trial
under ideal weather conditions, everyone seemed impressed."
-- ABN-AMRO said the big question for Globalstar is its market. "Globalstar believes
the sweet spot for the mobile satellite market lies within the 'cellular extension'
segment, that is, under-served telephone markets," ABN-AMRO said. "Iridium's
mistake, Globalstar contends, was focusing on the business traveler market."
-- Globalstar's stock closed up 2-3/4 at 27-1/4, while shares of Loral gained 7/16 to
close at 19-11/16.
((--Chicago Equities News at 312 408 8787,
chicago.equities.newsroom@reuters.com))
COPYRIGHT ¸ 1999 REUTERS LIMITED. ALL RIGHTS RESERVED. |
