<<Global Crossing is I suppose like that too.>>
I believe most investors are thinking like you. The fact is IMO the function of GlobalStar's offering can be duplicated by collaboration of wireless providers. Ever heard of Iradium? It took too long to launch and cell phone can do it and do it better.
What GX has is unique. Yes, some function of their offerings are done through collaborations of big service providers around the globe. However, GX's seamless network offers a one stop stop, true end to end VPN, VoIP, private lines between 4,000 cities throughout the world. Theoretically, a true one hop network from one end to the other. Whereas other service providers have to have many handoffs from one network to another. When something doesn't work, it is a nightmare to fix and it's a nightmare to customers. Customers know it but they had no choice. Now, they have. That's the main reasons GX is able to woo customers from incumbent large service providers.
It may be a surprise to some of you. GX is operating cash flow positive. They are not , however, free cash flow positive due to Capex spending, huge depreciation of an international build-out network. Not only can GX pay its interest and preferred stock obligations, they even fund part of their Capex through operating cash flow Q over Q. Once the last part of the Asia network is finished, i.e. from Japan to Korea to Taiwan and back (projected at the end of 2001), Capex spending for next year will be significantly lower.
They have about 3.7b at their disposal. They just re-affirmed guidance. They will end the year with about 1.7b to 2b left. They are projected to be cash flow positive 2nd Q of 2002. |
