Well, I listened to the Loral conference call 1-800-633-8284 #15056126 and it sounded better than the quarterly report read.
Jeanette Clonan introduction with boiler plate, then Bernie.
Loral performance - a good performance. Not knowing much about it, it sounded fine.
Globalstar in some detail!
This is what Bernie said:
Globalstar retail sales did not begin in any significant degree until March. Numbers reported were low because of only one month action. Only a few weeks for Brazil and Canada. Australia only the last day. China, Russia and South Africa won't come on until end of 2quarter.
SP partners make significant investments in Globalstar. TESAM for example contributed $170m extra capital to the Globalstar project in the past 2 months. Vodafone commitment is strong in the building out of services. Vodafone has ordered a fourth gateway for NZ which was not part of Vodafone's original plan. Vodafone is also doing a lot in developing marketing. Vodafone is supporting Globalstar. China has doubled their handset order even before service starts.
555,000 billable minutes. That's low but a small representation of territories. Total revenue $609,000 including royalties and revenues. In addition was $19m precommitted revenue by 5 Service Providers. Mobile only included. Fixed phones are not billable yet. Beginning in 2Q for fixed phone billable minutes.
No outstanding items such as type approval, which were dealt with as discussed last time.
Shipped 67000 phones through April. Q! and G developing data, fax, email, SMS and Web access around 3Q. Roaming now worldwide where service is available other than Scandinavia and eastern Europe.
Introductory promotional pricing. $400 reduction on the handsets across the board agreed by phone makers and SPs with each contributing $200 each to cut the handset price to $1000. [Ed: Vodafone Australia has obviously gone one better than that to get to US$640] 49c in the USA for a package but generally $1.50. Less than $1 in SAmerica and 73c in China. No change in wholesale prices to SPs.
In Canada, several government orders and repeat orders. Red Cross 100 phones. Fixed phones have been mostly for testing purposes only. Commercial next quarter.
Total registered 1.4 million minutes completed, not all charged of course. Cash burn of $94m less than $125m budgeted for Globalstar due to less marketing. Expect $125m quarterly in future.
Question and Answer seesion followed...
Revenue $600,000
April 118,000 minutes of use.
Decline going into 2Q?
BS: Not true -- going up every week and every month. 550,000 MOU in 1Q in press release, includes all utilisation. 118,000 is mobile-only in some countries.
Q! vendor financing...close to being done 2 months ago. Current payable to Q! not to be addressed. Expect to be signed in next 2 or 3 days.
Phones have been cut in price by manufacturers and SPs by $200 each [rounding out for LP] in the USA. [Ed: I suppose that's a worldwide deal].
Are we expecting reduced 2000 sales? We had no way of knowing what the numbers would be but if demand was there, we would get to the 2000 plan. That plan was tailored to handset production capacity. Now the problem is minute sales rather than handsets. "Going to report facts as soon as we get them"!!! [Ed: Yeah, right!] $400m additional VF total $500m from Q! Lockheed Martin not clear situation. $250m bank credit line maturing Dec. Loral might or might not need to back the loan.
Without revenue okay to Sept/Oct.
No answer on handsets sold and no MOU per subscriber info. Billable etc is mixed up. 67,000 handsets produced [excluding Ericy own distribution].
A$999 handsets in Australia = US$630. One bill for cellphone and satphone in Australia. 400 dealers in Australia.
Brazil - 3500 fixed ordered 1500 fixed 12000 mobile deliverecd. fixed $1500.
Argentina Satellite-mode only as terrestrial not ready
Canada is strong. 25% discount until July for MOU. 2400 handsets shipped; sold 600.
Chna 5000 fom Ericy and Q! 73c per minute
with no G subsidy.
Mexico strong
Russia regulatory agreement needed.
Korea ramping up
They expect to price bytes at the same rate as bytes used for voice so the Service Providers can sell the bytes available and not affect Globalstar's income.
Those are my rough notes.
Overall, it sounded okay to me. Price are coming down. Maybe things will swing into balance quite quickly and sales will accelerate.
What I did conclude was that Vodafone is keen to succeed and Globalstar appears not to have had to concede anything on minute prices, while handset makers and the Service Providers seem to be providing the price cutting. Australia seems to be used as a low price trial region. Vodafone is trying to find a sweet-spot in price elasticity by the look of it. Australia is GSM/Globalstar handsets only, so Ericy and Telit only, so those two are presumably doing some serious price cutting or maybe Vodafone Australia is doing it.
Maurice
PS: A reasonable report and trends to prepare for the Globalstar Memorial Day Massacre of shorts. Let's hope the shorts have started counting down. They won't want to be left behind in the stampede. Already, in a big Nasdaq red day, Globalstar didn't bend down. |
