WSJ article about George Soros dumping GSTRF shares.
April 21, 2000
Soros Fund Sells Its 5.33% Stake
In Globalstar Telecommunications
An INTERACTIVE JOURNAL News Roundup
WASHINGTON -- With the satellite-phone business adrift, billionaire
financier George Soros has sold his stake in Globalstar
Telecommunications Ltd., the public investment vehicle for the Globalstar
project.
Mr. Soros's hedge-fund group, Soros Fund
Management LLC, sold its minority stake in
Globalstar as of March 10, according to a
filing Thursday with the Securities and
Exchange Commission. Soros Fund
Management owned about 5.1 million
Globalstar common shares, or a 5.33% stake
in the company, as of Feb. 10.
Globalstar, based in San Jose, Calif., is a
partnership of a host of
telecommunications-service providers and
equipment manufacturers including Qualcomm Inc., Alcatel SA and
Vodafone AirTouch PLC. The company is led by founding partner Loral
Space & Communications Ltd.
Globalstar is trying to increase demand for satellite-based telephone
services following the collapse of two much-publicized global-telephone
projects.
Globalstar officials in late March said that the company would slash prices
for their phones and cut certain calling charges in a bid to win more
customers. The marketing push came weeks after the company launched a
major international advertising campaign and in the wake of the
slower-than-expected rollout of its services in certain areas.
The global-services project, which involves a fleet of 48 low-earth-orbiting
satellites, is being closely watched by analysts and satellite-industry
officials.
ICO Global Communications Ltd. and Iridium LLC failed in their early
phases. Iridium has ceased operations and is being liquidated, while ICO is
trying to emerge from bankruptcy-court protection with a financial help
from a group headed by cellular-phone pioneer Craig McCaw.
With Iridium's failure, Globalstar agreed earlier this month to take over
Iridium's 7,000 satellite-phone users in Brazil, which had more Iridium
users than any country outside the U.S.
In announcing the move, Globalstar executive consultant Gerry Cowan
sought to assure investors that Globalstar's venture wouldn't follow
Iridium's fiery lead, calling the project "well-funded" with "the right
technology."
Many analysts question how long Globalstar will remain viable, considering
that even if it were to grab every one of Iridium's 55,000 subscribers, it
may still never find enough customers to turn a profit.
Two years ago, investors had high hopes that satellites were the ideal,
lowest-cost way to meet robust demand for global-telephone services in
the Third World -- and would later help satisfy the anticipated surging
appetite for broadband telecommunications solutions connecting individual
users to the Internet. But only direct-to-home video broadcasting has lived
up to the optimistic billing.
The competitive landscape has been changed by a series of rocket failures,
steady expansion of cellular service, greater availability of fiber-optic lines
and sharply lower telephone rates for consumers.
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