Globalstar Telecommunications Limited GSAT Message Board

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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT

GSAT 60.75

-0.5%

Nov 28 9:30 AM EST

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To: Maurice Winn who wrote (3215)	3/1/1999 9:58:00 AM
From: Valueman	Read Replies (2) of 29987

ING Barings upgraded to a strong buy this morning. They used a new way of looking at valuation. Interesting approach. Globalstar Telecommunications Ltd (OTC: GSTRF-15) Upgrade to Strong Buy, Based on Discount to Iridium March 01, 1999 STRONG BUY § We are upgrading Globalstar to Strong Buy from Buy and reaffirming our $30, year-end 1999 price target based on our DCF valuation. We believe that the market has incorrectly associated Iridium's weakness with Globalstar, causing the shares of Globalstar to lose nearly 35% of market value from its recent highs. § Globalstar is currently trading at a 66% discount to Iridium based on our EV/Capacity Adjusted PPE comparison (EV/CAPPE). All satellite infrastructures are not created equally. Globalstar's infrastructure is superior to Iridium's in our view as we estimate that Globalstar has 470% more minute-of-use (MoU) capacity than Iridium and a lower overall cost structure. § We believe that Globalstar should trade at a relative premium to Iridium as Globalstar's system design, cost structure, business plan and target markets are significantly more attractive. We believe that the market is not properly considering the value of system capacity. § We believe that Globalstar could charge as little as $0.14 per satellite MoU on a wholesale basis to break-even; this compares to Iridium's $1.37. This could provide significant margins and/or pricing flexibility for Globalstar. Finally, although Globalstar still requires over $600 million to complete its system deployment, we believe that there is little risk that the company's could obtain the required capital. Parent Loral has over $600 million on its balance sheet that could be used to backstop Globalstar if necessary. On a conference call that we hosted last week, Bernard L. Schwartz, Chairman & CEO of both Loral and Globalstar reaffirmed Loral's commitment to Globalstar.

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