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

To: CommSatMan who wrote (6277)	8/2/1999 2:12:00 AM
From: cfoe	Read Replies (2) \| Respond to of 29987

Appreciated your analysis and it brought up the following (related) questions for me. How much of I* poor performance is simply that the system is based on the wrong wireless technology? Does the entire I* value chain (equipment manufactures, service providers, customers, etc.) know this and if so wouldn't this affect how they conduct the business? How much will G* using the winning wireless technology affect its chances of success? And finally, if there is a successful satellite wireless system in place, might not new uses and users show up that have not yet been factored in? Any and all responses will be welcome.

To: CommSatMan who wrote (6277)	8/2/1999 11:44:00 AM
From: Rocket Scientist	Respond to of 29987

CSM-thought provoking post, I have several comments... 1. On minutes of use per subscriber. This is a key assumption for anyone looking forward, because if each user terminal is generating only 60 mou/month, rather than the 140-160 as the company seems to assume, we have a much more difficult BP, Both to build the UTs fast enough, and find and sell to customers at a much higher rate. Personally, I don't have too much trouble with 100+ mou/month, considering early adapters are likely to need the service the most and that 15% or so of the UTs will be shared fixed terminals. I also believe the early marketing will/should focus on institutional customers, Govt and big industrial/commercial users, which will be relatively insensitive to per minute charges. Personally, I prefer to accept the company's forecast and then apply a risk factor or discount rate against it, rather than make up my own numbers. 2. Re: "A 12 billion call minute system requires about 480 continuous users worldwide" I guess you mean 480 average users/satellite, right? 480486024365=12B 3. Re: "This equates to about 16 million users worldwide to support the system at this level." This is just 12B cm/60cm/mo/12months, right? The company has claimed a user capacity of about 7 M users, at about 140mou/month 4. Re: "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." I don't know what this means. 5. Re: "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 $253.40. " If I follow your math, the figures you call EPS are really EBITDA/share. To get to EPS, you have to account for interest and depreciation, at least, which are likely to total 600+M$/year. Note the company has said it expects to have 1M subs by the end of 2000 at which time it will just break even on an EPS basis, even at a much higher usage rate/sub than you have used. Your analysis has basically accepted the company's subscriber growth forecast and sales price in the early years, but divided the usage and rev/customer by about 2.5. If your forecast turns out to be correct, it will substantially delay the cash flow breakeven point, result in additional financing requirements, longer time to positive EPS, and other bad things. It's a risk we all have to bear in mind, I guess. Regards, RS