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

To: Tahoetech who wrote (21394)	1/22/2001 8:38:20 AM
From: rf_hombre	Respond to of 29987

Tahoetech> Regarding Vodafone's lack of support, I don't think it was that black or white. In the past year or so and up to last week it probably was a case of Vodafone (Gent?) thinking thru the scenarios: 1/ "I can drop Globalstar now, save a few million dollars a year but my opportunity cost loss is huge if by some miracle Globalstar makes it." Pretty much the corporate equivalent of an investor who bought at a much higher price and who doesn't see the point of selling at a $1. or 2/ "I can keep Globalstar. This fits with my long term strategy of keeping as many short term options as I can. After all, no one, including me, has any clue what tomorrow may bring. So for a few million dollars a year, this may be a sound technology insurance and I need that for my shareholders. Also, I don't like the small but finite probability that Globalstar may be eating out of my roaming revenue. It took us 2 years to counteract the 17% yearly drop in profit per sub with our focus on roaming revenue and prepaid. In the unlikely event the service does take off, inspite of us rather than thanks to us, then and only then will we affix our brand name to it. That way we will keep our profits in the family while gaining further market share over our competitors." So there is some flavor of deception and duplicity in there but only because Vodafone seeks to maximize the expected value of its return to shareholders. I suppose that in the world of business decision makers end up doing 80% of the time the right thing for the right reasons but 20% of time the wrong thing for the right reasons. (in this case stringing along a desperate partner) The difficulty now in 2 is that Vodafone's insurance premium just went up by large amount and their hedging days are over. rf_hombre