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

To: Tahoetech who wrote (21355)	1/20/2001 3:09:13 AM
From: Tahoetech	Respond to of 29987

tom00 on the yahoo board bosted this from the gilder forum: it is only and excerpt, but I thought it was excellent: Posted to the Gilder forum - January 16, 2001 Why G* can survive Badar: The G* business model is terribly misunderstood, even on this forum where people have had a chance to get all the information about it. So let me start with a recap of the "original" business model. In the beginning there we four kinds of shareholders or partners: Loral is the largest partner because they would have had the largest benefit from building and operating the system. Next in line was Qualcomm who was looking for one more way to benefit from their CDMA technology. They recruited service providers to sell the system to the public. These service providers have between them 100 million cellular customers. If they could sell G* service to 1% percent of them then G* would break even. If they could sell G* to 7% of them, they would fill the G* system's first stage to capacity. Believe me, these numbers are very enticing and this was the original marketing plan. The fourth partner, of course, is Globalstar Telecommunications Ltd. (GSTRF - us!) whose job was to bring in money from the stock market. Of these four, three did their jobs very well. Loral has the system up and running and the satellites are better that expected, their useful life will be ten years and not seven and a half as the originally expected. Qualcomm got CDMA working and built the gateways for the service providers. G*TL brought in the capital from the stock market. The service providers fucked up! There are many reasons including the exorbitant licenses that they had to pay to their governments for cellular spectrum. In any case, they are not willing to lower rates and compete against themselves. Usually when a company is not willing to eat its own lunch someone else will. This will cost service providers down the line. It is important to realize that the original marketing plan sounded just fine on paper and that there would be no proof to the contrary until some time after they started selling the service to the public. That would be the second or third quarter of 2000. Whatever the reason for the marketing flop, Bernie Schwartz saw it quite quickly and decided to do something about it. This is what gave birth to the idea of the vertical markets. I don't know if it will succeed or not, but I have to give Bernie very high marks for being on the ball, realizing the big mistake they made and trying to fix it. That is what you expect from a great manager. The change from the retail market to the vertical market is not easy. First of all, the existing marketing team of the service providers is totally useless for this job, they only know how to sell retail. Globalstar has to build a sales and marketing team from scratch for these new markets. Second, you need new equipment and new software for the vertical markets, for example, encryption for military use, antennas and other stuff for aviation and automobiles. You have to make changes to the gateways to transmit data in addition to voice. To compound the difficulty, this change is taking place just when the economy is tanking which makes the sales job that much more difficult.

To: Tahoetech who wrote (21355)	1/20/2001 6:45:17 AM
From: rf_hombre	Read Replies (4) \| Respond to of 29987

Tahoetech> I've given that a lot of thought...why would Chris Gent ever think G could, or would, be a threat to his cellular business if, AND since, Vodaphone stood to reap such a profit from from the system?* The mobile telephony environment in the early and mid 90's (when the SP partnership agreements were being developed )was quite different. Globalstar was seen as an in fill peripheral system, complementary to cellular. Since then, several factors have made Globalstar's and cellular operators interests diverge. Ask any cellular subscriber what their top five gripes are and you are likely to hear: no service, dropped calls,and high roaming charges. Operators have been making a killing with roaming charges, the associated costs of which are not all that great. Roaming is just an excuse to rip off customers. In the same manner, operators are taking advantage of people with dodgey credit or temporary business travelers to offer them a "prepaid solution" which is more of an overpaid problem. When I call during the hours of 8-20, I get charged 1.5DM per minute (I am temporarily in Germany and have a prepaid plan), which is about $0.75. Just the other day, I called my friend in Italy and used up my 50DM prepaid credit in about 15 minutes! Anyway the point is operators, particularly in Europe, are making immense profits from prepaid customers (whose acquisition costs are close to zero) and from obscene roaming charges. And they do this without even having high quality or dependable service. Quite unlike Globalstar. Globalstar, if priced correctly, would eat into the establishment's roaming revenues, obviate the need for prepaid for a certain business segment and do so with a quality and grade of service superior to that of cellular. In this new context, I think there is some reason to believe that Chris Gent is in fact "keeping his friends close and his enemies even closer". Vodafone and SP cellular providers are afraid that Globalstar will erode their most profitable segment. They would be better off realizing that the battle of LEO economies of scale cannot be won, and keep the profits in the family by allowing Globalstar to cannibalize their high end segment. But I can imagine Vodafone executives turning blue at any suggestion of a Globalstar reduction in MOU price. I do not think it was a complete coincidence that Vodafone announced a pan European Monetary Union one rate plan of $0.75 on Jan 16. And it happens now just when the last rites are being administered to Globalstar? Interesting. rf_hombre

To: Tahoetech who wrote (21355)	1/20/2001 8:52:24 PM
From: tb98	Read Replies (1) \| Respond to of 29987

Tahoetech - "We are not competing with cellular"<< I've given that a lot of thought...why would Chris Gent ever think G* could, or would, be a threat to his cellular business if, AND since, Vodaphone stood to reap such a profit from from the system? I asked Tall Blonde about that...... This is something I talked about over a year ago (and got heartily slammed and I think even got a Maurice rant - i'm a collector, I think Maurice's rants will stand the test of time and will someday appear at Sotheby's S) "We're not competing with cellular." Believe it or not - I've heard this twice - the exact same words. The first time - was at Motorola during Iridium training. It was the first sentence out of John Richardson's mouth. deja vu a year later...Globalstar sales training "We are not competing with cellular"....can you say red flag? OF COURSE G* and Iridium were/are competing with cellular....any minutes of use taken from a cellular company are COMPETITION...and for a cellular company to PROMOTE Globalstar - they have to admit that their coverage isn't quite as "seamless" as their advertising would lead you to believe. And the catch is - Globalstar can't survive on "Emergency Use" MOU's. That helped cripple Iridium....the World Emergency Package (which had pay as you go minutes) was GREAT for Motorola - it sold the phones....it was disasterous for Iridium - nobody used the minutes - ergo - no "pay as you go". So - it's not even so much as true competition for the SP's....it's the PERCEPTION that the public has for their coverage...and having to admit they they DON'T cover "everywhere/all the time" "nationwide coverage"...."we go where you go" "Seamless nationwide network" "World Phone" "International Traveler Program" "Nextel's One Number/One Phone"... look at cellular carriers webpages and see how many times claims like that are made.....it's all public perception and branding of THEIR product that they don't want to hamper.