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

To: PAL who wrote (8884)	12/27/1999 8:04:00 PM
From: METMAN	Read Replies (2) \| Respond to of 29987

Tonight's CNN Moneyline cited "analysts" speculating a buyout of GSTRF ?? led to big runup today ... however, CNN failed to answer the question as to why it fell back to 32 and change from high ... who the analysts are ... and why someone would buy it now, anyway .... Sounds like idle "sound bites" to me ... Gilder report influence has much more credibility. Short squeeze and reshorted at the end of the day ?? -metman

To: PAL who wrote (8884)	12/27/1999 11:48:00 PM
From: Brian K Crawford	Read Replies (3) \| Respond to of 29987

PAL, I don't have any first hand knowledge of the Globalstar system costs, but I picked up a few random pieces of information along the way that I'll pass along: I understood the $.05 per minute cost figure cited for Globalstar to be the AVERAGE cost per minute sold at FULL system sell out. I recall reading somewhere that system capacity is 7 million minutes, so we have a long way to go to get down to that nickel average cost per minute. Remember that most of their costs are fixed, and already in place. 48 birds are launched. Everything is dependent on minutes sold. Everything. If they can't get enough minutes sold, their average cost per minute sold may be multiples of dollars, rather than pennies. Their gross margins will start out negative, and as they sell out the system capacity, those margins will turn positive, and then rise. If they fully sell out capacity, and their revenue figure per minute holds at $.45, their gross margins per minute will approach $.40 per minute ($.45 revenue less $.05 costs). Regarding the 400,000 minutes cited for profitability: I think this is the estimated positive cash flow crossover point. To turn a profit, (after depreciation and interest expense, etc.) I believe I read that they will need more like a million minutes sold. Meanwhile, the marginal cost of the next block of minutes they sell? ZERO. The system is built out, the sales and servicing infrastructure is in place. The discussion on whether people who have access to a cell phone would want a Globalstar phone misses the point of their market. They are going to sell this service to people who live, work, or travel in places where there is NO cellular (and in some markets, no wired) phone service. I don't have trouble imagining that they will be able to find a half a million users worldwide, using 10 minutes each. Hope this helps, Brian