Globalstar Telecommunications Limited GSAT Message Board

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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT

GSAT 61.21

+1.8%

Dec 2 3:59 PM EST

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To: PAL who wrote (8926)	12/28/1999 12:58:00 PM
From: Rocket Scientist	Read Replies (1) of 29987

I don't know where this 400K subs to be profitable figure came from, Gilder or some other newsletter, but it's clearly mistaken, imho. From the latest company 10Q, operating expenses and cash interest costs are 125M$ per quarter. There will be non-cash interest and depreciation expenses. The latter is easily estimated as 300M$/year (a 3B$ asset over 10 years). So the total expenses before EPS breakeven is at least 800M$ (I believe there are non-cash interest expenses and prefered dividends that make the situation somewhat worse) The company's guidance on revenue per subscriber has been approximately 1000$/sub/year (160minutes of use per month at .47$/minute average). So you'd need at least 800K subs for EPS breakeven. This is reasonably consistent with (actually somewhat optimistic, compared to) company guidance from May 99 that said it needed 1M subs to make operating and interest expenses and system replacement costs.

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