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

To: Drew Williams who wrote (11122)	3/23/2000 8:40:00 AM
From: Drew Williams	Read Replies (3) \| Respond to of 29987

This is what I sent Forbesdigital yesterday. ---------------------- This is probably a much longer letter than most people will read, but . . . As a Forbes subscriber and a Globalstar stockholder, it is disheartening to read such uninformed and erroneous information about the company in Forbesdigital. Unfortunately, this also reflects the same depressingly inaccurate information being written by many analysts, not the least of which works for Merrill Lynch. For a more accurate assessment of the company, you might want to check with George Gilder of Forbes ASAP. In his Gilder Technology Report (also published by Forbes), George has picked Globalstar as one of the thirty or so most important companies with significant, ascendant technology. You guys really ought to talk to one another. One huge misconception is that Globalstar is just another version of Iridium. Absolutely not true. First, Globalstar's CDMA technology (supplied by Qualcomm) works better than the Motorola-supplied TDMA system Iridium was saddled with. Globalstar's call quality, capacity, connection rate, and dropped call rate are all significantly better than Iridium's. Don't take my word for it. To steal the old Packard automobile slogan, "Ask the man who owns one." Better, call Globalstar's Chairman, Bernie Schwartz, or Qualcomm's Chairman, Irwin Jacobs, and borrow one for a week or so. Second, Iridium phones were only capable of communicating through their satellites, so Iridium was in direct competition with the cellular carriers. Conversely, Globalstar enhances the value of cellular networks. All Globalstar phones are dual mode (or, in Qualcomm's case, triple mode) phones allowing either GSM or CDMA cellular (depends on the model) as well as satellite communications. They default to cellular and only go into satellite mode when a cellular network is not available. Where Iridium phones were unable to make calls from indoors, Globalstar simply makes that call in cellular mode. (OK, so if you are inside where cellular service is not available, you still need to pick up a wired phone.) Third, all of the Globalstar's worldwide marketing partners and service providers are also investors with significant equity in Globalstar, LP. It is in their direct financial interest to do a good marketing job and make Globalstar successful. Yes, it is true that Globalstar's business plan is somewhat behind schedule. A big part of this was caused by a year's delay in getting the satellites into space due to the launch failure 18 months ago of a Russian Zenit rocket carrying 12 Globalstar satellites. This delay was 100% beyond Globalstar's control. More recently, Globalstar sales have been growing slower than originally projected. Marketing the system is the responsibility of the regional service providers, and their marketing programs have not started on schedule. There are many reasons for this, but a big one has been a shortage of handsets caused by Ericsson's failure to get their GSM compatible handsets certified for use in Europe. (I don't know whether this was caused by Ericsson not getting the phone right or whether they just did not send in the paperwork in time.) Last I checked, Ericsson still has not shipped unit one. On the other hand, Qualcomm's CDMA handsets work great and were made available on schedule, but they are not compatible with the more common (outside the USA) GSM systems. Additionally, there have been delays in getting some of the Qualcomm-built ground stations licensed and operational. None of these problems have been within Globalstar's or Qualcomm's direct control. I will admit that the Globalstar handsets are not as small or cute as the latest generation of cellular phones. Neither were the early cellular phones. They're working on it. On the other hand, the satellite component works great in the 75% of the United States and everywhere else where there is no cellular service and never will be any cellular service of any kind. They will work (subject to government licensing and ground station construction) anywhere within range of the satellites, which is pretty much everywhere on Earth except the north and south pole regions and the middle of the Atlantic and Pacific oceans. Additionally, Globalstar and their service providers are rolling out satellite pay phones for quickly and inexpensively providing telephone service in African and Asian countries where there is literally no competing telecommunications infrastructure. This will be huge once it gets rolling. I think this will be even more profitable than everything they do for the American market. Globalstar only needs one million customers WORLDWIDE to be profitable. The current satellite configuration has the capability to handle more than ten times that many at essentially no difference in operational cost to Globalstar. In other words, a very high percentage of the revenue above that brought in by the first million subscribers is pure profit. Right now nobody, including Globalstar, can say with any confidence what their subscriber numbers or minutes of use really are. We're told the first reliable numbers will be available this summer. I find it hard to believe that Globalstar's various partners cannot find a mere one million subscribers worldwide. The partners think they can do it, too, in pretty short order. They have all contracted and guaranteed minimum minutes of use. Projections vary, but the most reliable ones I've seen say Globalstar will reach break-even sometime during 2001. I believe this is a slam-dunk, and I've put my money where my mouth is. For more information, I suggest checking out Globalstar's web pages, globalstar.com Thanks for hanging in through this lengthy letter. You hit one of my red hot buttons. Andrew Williams