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

To: Timothy R. Tierney who wrote (287)	1/20/1998 5:19:00 PM
From: Maurice Winn	Respond to of 29986

Timothy, the initial limitation will be handset supply. Price is the arbiter of how many customers sign on. If handsets are horrendously expensive, like $5000, few will sign on. At $700 per handset, the customer then has to decide on price per minute offered. If it is a high price, then it will take years to fill the system. If cheap, then it will fill as fast as the handsets can be produced. There is in all discussions an attitude of a set price other than in the original prospectus some comment that prices would be variable if local agents wished to discount, then Globalstar would move too in a co-operative way. 5 years out?? That is no good. The system then has only 2 years to go. What kind of mismanagement leaves a resource unused for 70% of it's life? Your research shows it is NOT a question of capacity to handle customers. It is a problem of getting customers. To solve the last two years in which you find that demand exceeds supply, you simply increase the per minute price. Simple pimple, easy peasy. See what you've done? "....ya still have to pay for the system...". That isn't really true. You've done what I just did a couple of posts ago, looked at it from the Globalstar point of view instead of the customer's. Ya have to maximize profit = maximize revenue in this case. Customer's decide whether you get to "pay for the system". Actually, Globalstar shareholders have already paid for the system. The question is whether prospective customers decide to give you sufficient money to justify your decision to invest. If Globalstar has done a good job, they'll make heaps. If not, we shareholders are out of luck. The need to pay for the system doesn't have any bearing whatsoever on the price. The amount people will pay is the only factor that matters. Cheap minutes, expensive handsets to start. As capacity builds over a year, not 5!!!!!!! the per minute price should increase and handset prices decline. At capacity, the minutes available should be sold by auction. The handset offering the price and the subscriber accepting or not. The price offered depending on how busy the system is in the vicinity at the time. Everyone who wishes to will be able to connect. Your research showing more demand than supply will be wrong. Profits will be maximized. The next constellation will be able to be planned with confidence. You'll be stealing heaps of customers - or more accurately, they'll flock to Globalstar in droves. Stealing implies a lack of choice. Customers won't be turned back - they'll simply defer their call for a while until less busy. Maurice

To: Timothy R. Tierney who wrote (287)	1/20/1998 6:44:00 PM
From: Maurice Winn	Respond to of 29986

From Readware - more confirmation that they have got pricing off the planet and have no conception of how to handle pricing other than 1980s style price plans. See Loral thread at: Message 3208861 for the full story. Oh well, at least it's a good technical system they are launching even if they plan on running it like the Kremlin ran the 5 year agricultural plan. READWARE SAYS: ----------------------------------------------------------------- "I do think that the spread between G* and Iridium pricing will hold for a significant period of time given the marketing evidence that the demand for both Iridium World and G* will not be able to be met by the service providers. I do not see Iridium needing to lower its prices, if the reports I have seen on its client base are accurate. And I believe they are. I do not see pricing pressures till some time around late 2002, early 2003, when there will be three major systems and four minor ones (possibly only two-- sc., Alcatel and Ellipso). However, these pricing pressures may not materliaize if by 2003 the actual market for satcom telephony reaches 10 million users. However, that is too far away to make any statement worth considering now. I do know that there have been analysts who believe pricing pressures will start in the year 2000 because of a surplus to demand. Given the time, expertise, and management savoir required to form a satcom telephony constellation, I do not see any surplus of suppliers in the year 2000. It would appear that Iridium and G* will be well underway by then, making major marketing inroads, with possibly ICO Global about to commence at that time. However, ICO is behind a signigicant amount of time right now, and I think a realistic outlook on its presence to market is actually in late 2000 or early 2001. Analysts who predict an ecxess of suppliers to the market by 2000 arguably do not understand what is needed to form satcom telephony enterprizes. It is all that is required which makes their existence rare. As far as Teledesic goes, I do not think Teledesic will ever see the light of day in its present proposed 288 LEO constellation. No one else in the satellite industry does either. The capital cost for such an effort would not see a return for at least the first seven years. I further believe its interlink proposal, as opposed to Skybrdige's ground station proposal, makes no engineering sense at all. It is "overbuild", which is more easily corrected by the Skybridge proposal submitted to the FCC." --------------------------------------------------------------------- Editor: [me!] The analysts who predict pricing pressure straight away due to a surplus of supply over demand are right and Readware is wrong. Does he think a nearly empty $5bn - $10bn value system should sit up there as some sort of space museum to the technical prowess of old Nasa hands or something? The price needs to be down in the initial years to fill the system fast!!!! Fast! FAST, FAST, FAST!!!!! He goes on later to confirm that they don't expect to take customers on at more than a snail's pace. 400 000 subscribers per year for 1999 and 2000. That is hardly one handset production line. They should be aiming at 1 million or 2 million handsets per year. Or even 3 million to get it filled in 2 years. Or three - people might have handsets just as an emergency backup and never use them. What on earth are they thinking?!! They have Orbitel and Qualcomm preparing to make handsets. They should be making high speed production lines. READWARE AGAIN; -------------------------------------------------------------- "EBITDA 1998 1999 2000 G* --- 515M[206M] 1.2296MM[491.6M] REVENUES G* __ 614M[245.6M] $1.344MM [537.6MM} Notes: M= million MM= billion [ ] after G* indicates 40% total for Loral of G* operations These estimates assume "timely" launch of G* LEOs, and expectations of a total G* subsciption base (mobile, fixed-site, pager) of 432,000 in 1999 and 812,000 in 2000. The G* estimates take into account launch reschedule for G* from 4 December 1997 to 5 February 1998. These estimates are Earnings before income taxes depreciation and amortization." ---------------------------------------------------------------- MIW again; Wake up Globalstar. You are dealing with customers in the free world here. Not some military deal where price doesn't matter. It's a market. Customer choice. Free will. All that stuff. Free enterprise. Customer determined pricing. Competition. Maurice [Don't even think about congenial pricing deals and room for both Iridium and Globalstar to make money. Think winner takes all. That means the customer has to be the winner. Then they'll make Globalstar the winner]