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

To: rf_hombre who wrote (12253)	5/7/2000 10:26:00 AM
From: tero kuittinen	Read Replies (5) \| Respond to of 29986

Hombre - I understand the argument about Globalstar's superior technology. It's a powerful argument; the voice quality really is better than with Iridium - the cost of operating the service really is far lower than the absurd cost of operating Iridium. So far, so good. These are two strong reasons to believe that Globalstar really is very different from Iridium. But my point is this: you don't need to dispute these two facts to be skeptical about Globalstar. This discussion does not have to be divided between "shorts" and "longs" - the one camp viciously negative, the other in a snake-handling, holy-rolling futuristic frenzy. We can just look at the facts and try to figure out from what we know how similar Globalstar is to Iridium. And that is what is alarming here - the similarities that we see; not the superiority we expect. I simply don't understand the "who cares" attitude about the 1Q numbers. Why do you think the results are irrelevant? Service has been available in France, Brazil and Italy for months. Usually there is some pent-up demand when a new product arrives - the first quarter is indicative of underlying demand. It can't be just brushed off. The first quarter is what killed Iridium. There were a number of people - notably the infamous Lehman Brothers analyst - who tried to brush off the first quarter results from Iridium. This crowd argued that the first quarter does not mean that much - the advertizing has hardly started, people need to get more familiar with the concept, word of mouth would sell the product, the second generation phones are just around the corner. Do these four arguments sound familiar? They were the flagstones paving the way to hell for Iridium investors. I am not citing Iridium here purely to annoy Skip (though I can't claim it isn't a factor). I am citing it because it is relevant. It's relevant from the actual subscriber number point of view, if not from the engineering POV. If Globalstar ends up with less than 10 000 subs from the first quarter, we are dealing with an exact reproduction of the Iridium show. First comes the promise of roughly 1 million subscribers within 12 months - then the shock of the first three months delivering about 1% of the first-year projection. This shock killed Iridium, because the wave of negative publicity drowned the ad campaign and spooked the retailers. It also scared the prospective buyers - every article with the keywords "bankruptcy" or "Chapter 11" or "liquidity problems" will drive away another batch of possible customers. There was no reason for Globalstar to follow down the same path. Nothing forced the management to make the "1 million subscribers by the end of 2000" prediction. Nothing but hubris, arrogance and sinful pride. Now it's too late to revise the numbers downwards again. There already was one revision - from 1 million to 550 000. Another revision at this point would only underline the problems. It's too late for honesty now. I am not talking about whether Globalstar is an "emerging technology" here. I am talking about the plain common sense the management seems to lack. That crucial sixth Bud that is missing from the sixpack. By setting up a very high target and then missing it by a country mile, any company sets itself up for becoming the target for shorts and hostile articles. You can't blame the critics - they are now feeding on the material Globalstar provided them in the December conference call. China and Russia were supposed to be operating during the first quarter, more than a thousand phones shipped in Italy/France, Brazil looking good, etc. Last December Globalstar set up the carcass for hyenas that are now coming out of the woodworks. That carcass of empty promises is now starting to rot. Nobody should blame the scavengers; they are an important part of the financial foodchain. They tear apart bloated corpses and thus free resources for other animals to thrive on. It's the law of the business jungle and railing against it is futile. There are buzzards and there are eagles and this is how it should be. It's that December conference call that laid the foundation for tomorrow's quarterly results. If the Southern European countries have not absorbed at least 10 000 G* phones, the question why has to be answered. How can the demand that the management saw last December not result in substantial sales during January-March? If Brazil is as promising as it was portrayed to be in December; why aren't the minutes piling up? Globalstar is not being damaged by Hymowitz, Thestreet.com or Bloomberg. The management triggered the negative coverage. Tero