LEH: 11/11/97 Research Report on GSTRF (final page)
subscriber growth follows a steep ramp already, (we forecast net additions of
600,000, 800,000, and 1,000,000 in 1999, 2000, and 2001), we forecast the
company will not catch up on subscriber additions until after 2001.
Accordingly, we have increased our 2002 and 2003 subscriber addition forecast
by 100,000 per year. As a result of these changes, we are lowering our year-end
1998 target price by $2, to $63.
We are raising our 1997 EPS estimate to -$0.93 from -$1.01. This change
reflects the positive impact of additional interest income on higher than
expected cash balances. The new estimates include the impact of two debt
financings during June 1997 ($325 million) and October 1997 ($325 million).
We would note that interest expense arising from these transactions does not
flow through the income statement since is being capitalized and added to
system cost.
We are reducing our 1998 EPS estimate to -$1.36 from -$1.26, reflecting the
absence of 1998 revenues. Our revenue forecast of $15 million in 1998
revenues has been changed to zero. Offsetting is an absence of depreciation
expense on the Globalstar system and interest expense. Each of these two cost
items take effect when the Globalstar system is turned on.
We would use any dramatic sell-off as an opportunity to buy shares in
Globalstar.
BUSINESS DESCRIPTION: Globalstar is developing a worldwide low earth orbit
satellite-based telecom system that will offer low-cost, high quality voice
telephony & other digital services on a wholesale basis worldwide.
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Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the
past three years a public offering of securities for this company. B-An
employee of Lehman Brothers Inc. is a director of this company. C-Lehman
Brothers Inc. makes a market in the securities of this company. G-The Lehman
Brothers analyst who covers this company also has position in its securities. |
