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

To: Jeff Vayda who wrote (8089)	10/28/1999 12:16:00 PM
From: Valueman	Read Replies (3) \| Respond to of 29987

ING Barings Satellite Research Group Globalstar Telecommunications Ltd (OTC: GSTRF-21) ~? Globalstar Follow-up - More like EchoStar and NOT Iridium We are genuinely concerned regarding media and investor reaction to our Globalstar note from yesterday. We are troubled that several in the media have mis-construed our statements to have anything to do with Iridium. We view Globalstar more like EchoStar at its early stage of service introduction. We offer the following points that we feel are important to consider. We DO NOT view Globalstar as Iridium all over again. We have been steadfast in our belief that that there is significant unmet demand for telephone services in emerging markets, and that satellite systems such as Globalstar's is the most efficient infrastructure to meet that demand. Iridium was the Edsel of Satellite Systems. Globalstar has the right strategy in our view. We view Iridium's relevance to Globalstar's success about as meaningful as the Ford Edsel's failure to the success of Toyota's Camry. Our well-known, long-standing price target on Iridium was $0. Iridium had; too little capacity to cover expenses, the wrong business plan, the wrong target market and antiquated technology. We NEVER believed in Iridium. We view Globalstar more like EchoStar - a satellite history lesson below! echoStar then and now - a history lesson ú DISH stock at service introduction - pre-split $42 ú DISH Network Service introduced in 1Q96 with a "soft-rollout" ú (only 1 satellite, 80+ channels) ú Guidance for year-1 was "a million subscribers should be a cake-walk!" ú Actual subscribers at YE96 - 350,000 ú Actual subscribers after 12 months of service - 437,000 ú Stock price after 1 year of service - $12 ú Bearish Investor sentiment - No market for DBS service - just a niche, cable will kill them Consumer equipment too expensive, $750, $1,000 w/install EchoStar may require more capital ú WE WERE BULLISH ON DISH WITH A STRONG BUY RATING - ú WE BELIEVED IN OUR UNDERLYING ASSUMPTIONS. ú DISH shares today are now the trading at the equivalent of $256, up from $12 at that time. ú We feel the same way about Globalstar today. ú Does any of this sound familiar? We believe in Globalstar....and in learning from the past. We strongly believe that if investor's expectations in EchoStar's case was for 400,000 subscribers in the first year of service, rather than 1 million subscribers, than the DISH stock price, and investor sentiment after the first year, would have reflected much more optimism. We would rather find ourselves raising our Globalstar numbers in '00, than lowering them. We believe that by taking a conservative stance towards our Globalstar projections with an attempt to manage investor's expectations, that Globalstar will have a greater chance of being viewed as a success in 12 months from now. We believe that this will be the case. When we write in our research "our belief" or "we believe," we mean just that. Unless we specifically write "management believes," then our opinion is that of our OWN formulation, and is not necessarily that of management's. In fact, management often disagrees with us, as in our long-standing Iridium price target of $0. Our Globalstar projections are mostly our belief, Although we have had several conversations with management to discuss our revised projections, management disagrees with us on our subscriber projections through the first half of 2000 of 60,000 total subscribers (roughly 45,000 mobile, 15,000 fixed.) Management believes that the first half number will be much greater and that our projections may be too back-end loaded. We look forward to the day of revising our numbers to the upside. Our 440,000 subscriber projections assumes 600,000 handsets delivered in 2000- and accounts for the lag time of building handsets and converting those handsets into subscribers. We've known this since the Globalstar analyst meeting in September - and our numbers were first revised at that time. When discussing this element of our projections, management did not disagree with our logic. Management strongly believes that demand exceed 1 million subscribers for the year 2000. We believe that demand will be MUCH GREATER than this over time. However, as was the case with EchoStar, we believe that it takes time to get the distribution machine into full gear. We have no way to gauge when that might be. We reiterate our Strong Buy Rating and 12-18 month price target of $36 We derived our target price utilizing a 16.0% WACC and a 6.5% terminal growth rate. Additional information available upon request. Stocks priced as of previous session's close. ~ ING Barings LLC makes a market in the common stock of this company. ? ING Barings LLC has acted as a manager or co-manager of a recent securities offering.