The following is a copy of an e-mail that a concerned shareholder close to me sent to LOR IR. LOR IR then responded back, and finally there is a response to LOR's response:
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Dear IR,
As a very long time stockholder of GSTRF who has been through all the many disappointments, I am very concerned that now when we should be reaping the benefitsof some success, we continue to flounder. Certainly unforseen problems will keep appearing but the lack of significant progress has caused me great pain, financially and emotionally. I have heard that management occasionally reads the Silicon Investor message boards. A few of these message board posters are quite knowledgeable and are worth listening to.GSTRF's technology apparently works well. The system has huge unused capacity which is sad. Everything, everything on earth can be sold for the right price. I buy things that I don't really need if it seems to be a bargain. Wireless communication is something nearly everyone wants. All of these unused minutes could be sold for the right price. Every minute unsold is revenue lost forever. I am not a marketing person but it seems so simple to me. Price the minutes correctly and they will sell. If they are not selling, they are priced too high. Please correct me if I am wrong.I have invested a significant amount of my hard earned money in GSTRF. I would hope that management would be more considerate of the shareholders and properly price and market GSTRF's services BEFORE it is too late.I would appreciate a response from IR and/or management.
Sincerely,
XXXXXX XXXXX, M.D.
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Thanks for your email,
In general, your questions suggest that we must compare our pricing to cellular service. As we have always said, we are not competing with cellular. Globalstar is a service that is intended as a supplement to existing cellular for use when cell users find themselves outside the range of cell. This is why our service providers are existing cellular companies who view Globalstar as an extra service for their customers.
The cost per minute is far above normal cellular costs. True, and when a user is within range of cellular systems, calls may be made with a Globalstar phone in cellular mode at cellular prices. When outside the range of cellular, $1.50 a minute is the premium people are willing to pay to still have telephone connectivity. After all, 10-cents-a-minute cell service doesn't do much good if there is no cell to connect to.
Market studies that take into consideration demographics and economic factors indicate that there is an addressable market (i.e. people who can afford and are inclined to buy the service) of 30 to 40 million people. Our service providers (who are telephone service companies) validate this estimate.
Globalstar is early into its rollout and it is premature and short-sighted to declare our strategy wrong.
John McCarthy
Loral / Investor Relations
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Mr. McCarthy,
Thank you for your prompt response. I have not heard one word from a service provider offering GSTRF service as a supplement to cellular service. I am one of many, many cellular users who is less than fully satisfied with cellular service (ie dropped calls etc.) I would be happy to have GSTRF service to fill in the gaps of cellular but not at $1.50 per minute. I would limit my use of GSTRF service to emergencies only at that exorbitant price and that is not going to utilize all those minutes currently being wasted in space. If your marketing surveys find people willing to pay $1.50 per minute, then why are you not selling more service. Your marketing team has not contacted people in the "real world". Unused minutes are lost forever. Further, the US service provider in my area, Air Touch -now Verizon, is not advertising nor marketing Globalstar service. My concern as a stock holder is preservation and success of my investment and I am very concerned that management may not be aware of the apparent lack of marketing at least in my area of southern California.
It appears to me that the current sales and marketing plan may not be working as planned. Time is running out and perhaps a change in marketing and pricing is now in order.
Sincerely,
XXXXXX XXXXX, M.D
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