Rocketman:
The difference between GSTRF and Iridium, the most recent flop in
satellite communications can be described in four letters: CDMA.
Globalstar will use it as the medium of transmission, instead of
the TDMA technology used by Iridium. GSTRF will be able to
transmit not just crystal clear quality voice calls, but data,
messaging, paging, and GPS services. GSTRF uses 48 satellite in
low orbit above the earth in conjunction with a ground-based
system. Thousands of beta users already report fantastic
results. Though commercial service has already begun, it will be
available for the rest of us by the end of the first quarter in
2000. Loral Space and Communications owns 43% of the venture,
while QCOM and others own the balance.
Isn't this thing doomed to fail like the rest of them?
Emphatically, the answer is no. GSTRF is based on CDMA
technology, which is far superior and thus the new standard for
wireless transmission, outstripping the growth rate of GSM and
TDMA combined. Other systems can not as reliably transport data
the way CDMA can. As for fundamentals, GSTRF costs only half as
much to build as IRID and is profitable with only 400K users.
While IRID had to charge $1 per minute just to break even, GSTRF
has a cost of $0.05 including operating costs. They have already
pre-sold $25 mln of time to wholesalers averaging $0.47 per
minute - 85% cash flow margin at peak use. Want more? It's
scalable so that when the system needs more capacity (around 7
mln users), more satellites can be added and ground equipment
changed without modifying the whole system. 40K handsets are
already sold and 200k are expected to be in circulation by the
end of the first quarter. We could go on about the technological
aspects that will make this system a huge success, but that gets
boring. For us traders, we should note that volume has been from
30% to 500% greater than the ADV last week, indicating a heavy
accumulation. Historical support and resistance has been
channeling between $20 and $30, respectively. We believe that
after the new year and maybe as early as next week, GSTRF is
finally going to get the respect it deserves. If you want to
target shoot, mild support is at $24 and $26. Otherwise, a
breakout over $30 with volume is the key to a good entry.
In the news, George Gilder, telecoms guru had kind words for
GSTRF, which might help explain its monster volume on Thursday.
He wrote, "The stock is still down because of the aftershock of
the TDMA failures of Iridium and Teledisic. We are not market
timers, but as a historian, I note that Globalstar is an
ascendant technology, and that the stock has yet to ascend. You
do not have to be a rocket scientist to recognize that such a
discrepancy between potential and kinetic energies - such an
underestimation of CDMA and bandwidth demand - historically
supplied the voltage for the explosive ascent of Qualcomm. "Nuff
said." Ditto (Remember from the Nortel write-up that bandwidth
demand is projected to increase by 100 to 260 fold in the next
four years)
from Optioninvestor.com
Paul |
