CDMA, Globalstar versus Iridium, Inmarsat, etc. Message Board

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Technology Stocks : CDMA, Globalstar versus Iridium, Inmarsat, etc.

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To: duncan moyer who wrote (122)	6/8/1997 2:12:00 AM
From: Maurice Winn	of 381

Duncan, $200 million issue of shares in Iridium World Communications Limited gives 8% of Iridium LLC, the operating company. If all shareholders in LLC put in the same amount, that would be $2.6 billion. Total Iridium LLC cost is $3.4 billion, so the $2.6 bn is not enough to cover the cost. Loans making up the difference? This all seems a bit odd. It means the original shareholders are almost giving away the company - the new shareholders don't seem to be paying much premium. Globalstar Telecommunications Ltd market capitalisation by comparison is $900 million for about 22% of Globalstar LP. That would give market capitalisation of $4.5bn for Globalstar LP. But the cost of the system is only $2.5bn. So there is a premium in the GSTRF shares of almost double. That means there is much higher expectation built into the GSTRF price than these new Iridium shares. That means the Iridium LLC people are selling Iridium World Communications at quite a big discount. That means they think it isn't very good! Not surprising when you read: "...Iridium had planned to launch its first five satellites in January, but technical problems and an unrelated explosion of a McDonnell Douglas Corp Delta II rocket, the type also used to launch Iridium satellites, delayed the launch until May." They had some technical problems? What technical problems? That is the first I've heard of that. It wasn't just a rocket failure at all. They say the few satellites already up are performing better than expected. At this stage, I wonder how much the original Iridium LLC shareholders put in and how much is to be borrowed. It all adds up to a lack of confidence in their system at present. I also wonder what their subscriber capacity is [more accurately how many calls can be connected to reach capacity] at peak time. Looks as though everything is heating up a bit. Maurice

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