Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: SidStock who wrote (144)	11/12/1997 8:35:00 PM
From: SidStock	Respond to of 29986

LEH: 11/11/97 Research Report on GSTRF (page 2) Globalstar is delaying the launch of its first satellites from December 4, 1997 to February 4, 1998, a two month postponement. The reason given is that the satellite telemetry and tracking and control systems in California that are the responsibility of SSL/Loral are not ready. These systems monitor the launch and the satellites in orbit, and the Globalstar engineers felt they needed another three to four weeks of testing. The delay is NOT due to the satellites, the launch vehicles, or the ground segment hardware/software. We spoke with CEO Bernard Schwartz this morning and he said Globalstar could have launched within 30 days, however Boeing's launch queue allowed for February 4, 1998 at the earliest, as opposed to January. The initiation of service, previously scheduled for late 1998, is also being postponed until the first quarter of 1999. This is the key issue in terms of the impact on value of the company. Bernard Schwartz indicated to us that this could mean about $100 million of lost revenue in 1997 and perhaps one month of lost revenue in 1998, at worst. He stated the company could possibly make up some of the lost time on the back end. The delay has de minimus impact on the cost to launch the service, so the only real financial concern is the start point of the revenue vector. Our calculations indicate that this delay has minimal impact on the valuation of the company, as the back end of the DCF model is what really drives the value. We have shifted the 200,000 net subscriber additions we had anticipated being added in 1998 to 2002 and 2003. Because our forecast of

To: SidStock who wrote (144)	11/12/1997 8:39:00 PM
From: SidStock	Read Replies (2) \| Respond to of 29986

LEH: 11/11/97 Research Report on GSTRF (final page) subscriber growth follows a steep ramp already, (we forecast net additions of 600,000, 800,000, and 1,000,000 in 1999, 2000, and 2001), we forecast the company will not catch up on subscriber additions until after 2001. Accordingly, we have increased our 2002 and 2003 subscriber addition forecast by 100,000 per year. As a result of these changes, we are lowering our year-end 1998 target price by $2, to $63. We are raising our 1997 EPS estimate to -$0.93 from -$1.01. This change reflects the positive impact of additional interest income on higher than expected cash balances. The new estimates include the impact of two debt financings during June 1997 ($325 million) and October 1997 ($325 million). We would note that interest expense arising from these transactions does not flow through the income statement since is being capitalized and added to system cost. We are reducing our 1998 EPS estimate to -$1.36 from -$1.26, reflecting the absence of 1998 revenues. Our revenue forecast of $15 million in 1998 revenues has been changed to zero. Offsetting is an absence of depreciation expense on the Globalstar system and interest expense. Each of these two cost items take effect when the Globalstar system is turned on. We would use any dramatic sell-off as an opportunity to buy shares in Globalstar. BUSINESS DESCRIPTION: Globalstar is developing a worldwide low earth orbit satellite-based telecom system that will offer low-cost, high quality voice telephony & other digital services on a wholesale basis worldwide. ------------------------------------------------------------------------------ Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the past three years a public offering of securities for this company. B-An employee of Lehman Brothers Inc. is a director of this company. C-Lehman Brothers Inc. makes a market in the securities of this company. G-The Lehman Brothers analyst who covers this company also has position in its securities.