I stopped posting after Iridium's death was clear. I have not yet purchased Globalstar. The easy bet was shorting Globalstar in the mid to high thirties or better for a trade down to this current level. My negative outlook and predictions for Iridiums demise are part of the record (as well as several others who held similar beliefs). I am also on record saying that Globalstar will be a success. I still believe that, however, I am dissapointed in several areas of their current roll out plan.
First of all, their ad campaign looks like something Iridium would have done given a new equity or debt infusion. Those magazine ads really suck. What are they thinking? Some guy in an untucked shirt with the wilderness on the left and the big city on the right with a little annimated looking sat laying down a beam? This poor showing I did not predict. The game plan with Vodaphone and other providers, the sales channel and the current and future pricing model should drive Globalstar to success. For that reason, I would be a buyer of the stock in the mid to low teens. I am finally willing to give this stock a buy from a long term perspective. Beyond those who bought real early, post Zenit or have been traders, the long term investors here have been poorly rewarded or worse, punsished.
ICO is looking more and more like a Nextel overlay system and having their first launch failure will not help their time to market situation. Globalstar looks to be the only pure play on a sat phone system.
Their campaign should have ads that show people in work, leisure or life settings that demonstrate the viability, need, freedom, security and reliability of a satellite phone. Their ad campaign is not doing it. How about a picture of the phone in the middle of the page (a similar photo to what they have in the current ad, but much larger (under actual size, but people may think it is smaller). Surrounding the phone should be a collage of pictures showing the phone being used in its most likely settings. This can range from the corny and overused (person talking on the phone while on top of a mountain, don't we all find ourselves there!) to the realsitic and thought provoking (mountiain biking in the wilderness, hunting, hiking, fishing in the middle of nowhere, fishing way out in the ocean, traveling in third world countries, workers in remote locations, emergency situations, military operations, sailing, skiing, on the beach, remote location satellite phone booths, a close up of a cell phone with the "no signal or no service" message, etc, etc, etc.)
At least an ad like this might make people think about the potential benefits or uses of the phone rather than what Globalstar is currently doing, which is reminding them of Iridium's sucky campaign and current bankruptcy. I hope they change gears quickly.
They have the flexability and the model to build a subscriber base that can be profitable. The reality is that this market is not as large as people think unless you treat this system as an extenstion of the ground based network to locations that do not yet have adequate wireline or wireless coverage. If you view it that way, then the issues becomes pricing and will it really be a substitute or extenstion if the price is double or triple what a wireline or wireless connection would cost if built.
Even when you consider the corporate, military or leisure market users, the time spent on a sat phone may not be as frequent as Globalstar would like. Because of the phone's size, it will not play as the everyday cell phone, but will be taken out and used when the expectation is that the person might be traveling to an area with poor or no cell coverage. If not, the phone will stay home, in the car or at the office. I know there is a bigger model here based on sat coverage where wireline or cell coverage doesn't exist.
Globalstar will have to balance the subsidy model and minute pricing model against the realistic amount of traffic and subs they can sign on to use the system. My bet is that they will find this optimal structure over the next year and that this will be a viable system. I say that not having read this board over the past 6 months or really following the company or the recent conference calls with analysts. Hopefully Globalstar will be the last of the monoline service leo systems to be launched. If Teledesic does happen, it better handle voice, video and data, if not, it will be Iridium II.
With wireless, spread spectrum, FM side band carriers, HDTV spectrum, cable, fiber, DSL, Geo sats, powerlines and most recently, lasers, I am having a tough time understanding how and why a teledesic would make sense. If these people in remote places that won't have access to the above technologies to deliver the internet (that is assuming they need broadband over dial up) don't utilize a satellite based system like Globalstar to make phone calls, what the hell makes teledesic think they will become sat based broadband users.
Beyond DTH satellite TV and sat telco/data/video transport via GEO's, I think the current sat systems, in design or deployment, have flawed business models against the march of competing technologies. I no longer believe that GLobalstar is going to be a home run without some nimble and savvy moves to exploit the systems potential asap. My bet is that management can do it. Their selection of an advertising company and campaign is chipping away at my confidence. |
