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Panic in the streets. Why? I guess the perception is we are going bk. And what is that based on, hard facts or speculation? We all know that we presently do not have hard data so it must be speculation. Is it pure speculation or are conclusions being drawn based upon anecdotal evidence. I think the former because the anecdotal evidence that I have uncovered indicates an entirely different picture than bankruptcy.
I have called several more dealers this week who were all very positive. Jon, yesterday I spoke with Adam at the GMPCS office in Pampano Beach. I would encourage anyone who needs a little reassurance to call him except that he is very busy and his time would be better spent selling phones, which he is! He said he could sell 5000 when the Carribean comes up. The antenna for the PRican gateway was installed in the last few days. It is expected to come on line in Sept. He said what many others have said re: data "it will be huge." The data software was installed in the Clifton gw Tuesday night and is now in testing stage.
I called Norsat in Houston today who also was very positive. My first call to them was on 5/23 when I got a receptionist who really didn't know much about the product and said she didn't think they were getting much interest. A much different response today.
I have spoken with 40 - 50 distributors over the last four months with only 5 or less having anything negative to say. All have sold phones. Now I am hearing things like "accelerated" or "exponential" in describing interest and sales growth. Granted, this is only anecdotal evidence but it is rather overwhelming. I wonder how many distributors the analysts have called? BTW, I do encourage anyone to make calls like I have. I would love to compare notes.
I have had my share of frustrations, not with the distributors but with the inaccurate info on the G*USA web page. The Norsat dealer listed on the web page for Denver has the # disconnected. The Texas phone numbers are a joke. The Seven Seas number is wrong (409)271-1177 gets you a .com company and the receptionist said she has been getting a lot of calls for 7 Seas. I guess some folks are trying to buy phones but can't.
World Communication Center
401 Elm Street
Graham, TX
(940)549-2221 This one gets you a fax #.
Frustrating! This is a G*USA issue which should be addressed.
So if the anecdotal evidence is this good, why is Lor pr being so quiet? Because they can't win with the press and are probably waiting for hard numbers before coming forward. If sales are in fact accelerating, as I am lead to believe from many sources, then the longer they wait, the more impact the announcement will have. I have got to believe that BS would derive some pleasure in being vindicated.
Financing the anticipated shortfall is a good example of how they can't win. IR has told me and many others who have asked that the financing is not a problem, that they have several options and they will choose the right option if necessary at the time they know exactly what the needs are. Now let's see how Bloomburg might report that:
"Globalstar reports that talks with Chase leading the renewal of the much need 250 million credit facility have been terminated. Company officials refused to say just how this shortfall would be covered. Globalstar is the 3rd of the upstart satellite ventures facing financial difficulties etc, etc."
Let's talk pricing for a few minutes. I must admit I go back and forth on the questions of slashing prices and putting phones in all the kiosks - saturate the market. I tend to agree with Maurice that unsold minutes are lost forever so lower the prices until they fly off the shelf. The sp's obviously look at it differently. They say we have a premium product with high margins which we don't want to give up. If we lower prices we can never raise them and we don't have to. (I am 90% certain that the current 30% discount will become permanent.) We will sell phones to high end users at these rates and make a bundle. We don't want this to become a commodity product or compete with our cellular business. They may be right. If they are, we will be just as well off a year from now if they have 250,000 subscribers in No America using 300 - 500 min/month as opposed to 500,000 using half that amount. I see no evidence that the SP's are asking G* to reduce the wholesale so they can lower their prices.
Let's say they do decide to lower prices. Here is a good headline: "Globalstar today slashed prices in an effort to avoid certain bankruptcy." That ought to get us under 3/sh.
So after all this rambling, my ever so humble conclusions right now are:
1. Sales are accelerating which will manifest into good solid hard data. The anecdotal evidence supports this and 2nd and 3rd qtr numbers will confirm this.
2. The sp's just may know what they are doing and we all may be pleasantly surprised.
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