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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: Rocket Scientist who wrote (6274)	8/1/1999 10:33:00 PM
From: CommSatMan	Read Replies (2) \| Respond to of 29987

I haven't had too much to contribute lately, so I have been watching and off studying and learning. My skepticism has always been the 12 billion call minutes, so I would like to provide some observations about this and then my analysis of the stock potential in the short term. One of the basic assumptions one has to make is how many minutes a month each user buys. Within all of my calculations, I assumed that each user would buy 60 minutes of G* time a month. Some will think this number is too large and others too small, but you can ratio the values based on the minutes per month, if you want to change the values. A 12 billion call minute system requires about 480 continuous users worldwide. This equates to about 16 million users worldwide to support the system at this level. Without even discussing the likelihood of a power limited satellite supporting 480 continuous users within the demographics of population density, this is a lot of users and requires a phenomenal distribution network to equip. Secondly, I assumed that the system reached the published 1,000,000 subscribers by the end of 2000 and then continued to add subscribers and had 2,600,000 by the end of 2002. I did a simple linear growth and while I know that the growth rate will be anything but, a more sophisticated growth pattern made the math more difficult than I wanted to mess with. Some other assumptions: G* receives $0.50 per call minute, $30 per customer per month, has $200,000,000 per year in operations cost, 250,000,000 outstanding shares and P/E of 35. Based on my projections, I show G* end of 2000 EPS @ $1.38 and stock value at $48.50; end of 2001 EPS @ $4.36 and stock value at $152.60; end of 2002 EPS at $7.24 and stock value at $253.40. Some important points. To make these values, requires G* to add about 67,000 customers each month and keep in mind that Iridium has yet to make even 30,000 and they have been in business for over 7 months. Therefore, there is some risk that Cash Flow in the early going will cause G* similar problems to those that Iridium faced. As always, these are just my opinion, but I thought I would share my analysis with the board in the hopes it would stimulate more conversation on issues like cash flow and profit and loss. CSM