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: Mr. Adrenaline who wrote (259)	8/26/1997 4:02:00 PM
From: Maurice Winn	of 381

Let's just be wildly optimistic for a minute. Let's say, at full capacity, 6 million subscribers each pay $1000 per year to Globalstar, which would be 1000 minute at $1 per minute. Something like 3 minute per day. Hardly excessive and surely Luke SkyHero would be that busy. [I don't think that would be full capacity for Globalstar, but never mind the details]. That gives $6bn per year. Say $1bn for costs. It isn't that high, but it keeps the numbers round. GSTRF share of the remaining $5bn is $1bn. That is about $30 per share profit. At P:E of 15:1 that would mean a share price of $500 for GSTRF. Now let's say they are thinking ahead and are even now organizing the second constellation because demand is obviously going to be way more than 6 million people! Heck, that is only 1 person in 1000. There must be dozens per thousand who think they are Luke SkyHero and can back it with money. Up goes the second constellation starting about 1999 or 2000. Even 2001 if they can't get launch vehicles booked earlier. That will only cost about $2bn to build because of all the experience they've had. But customers will be clamouring at the door and the system is quickly filled with another 6 million happily chatting 747 passengers and billion dollar deal doers. In comes ANOTHER $6bn, less the cost of the new system, which at $500 million per year interest and depreciation isn't too high. Also, there are a few extra administration costs with the extra customers, but no new gateways or anything expensive. So another $5bn is in the bag. $1bn for GSTRF! Weeeeee!!!!! That is $2bn per year income for GSTRF! Still the same number of shares as the second constellation was funded by loans. So now each share gets $2000 million divided by 30 million is $70 per share. At 15:1 P:E that is $1000 per share. Current price $40! Hey, how about we do a third constellation. Everyone is going to want one of these phones!!!! Cut the price a lot too, to keep the competition at bay. Not that there is any in sight. M-Star [I don't believe it] won't be voice and Iridium is too expensive. Others are too small, geographically limited or can't fund their launches. Maybe there will be some taxes to pay, but you get the drift. Mqurice [Maybe I added up wrongly somewhere? Can anyone see a mistake? Is that wildly optimistic or conservative?]

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