To: Brooks Jackson who wrote (2142 ) 1/31/1999 12:01:00 AM From: BeverlyB7 Respond to
Next CKFR: I will make two related predictions. These are Globalstar (GSTRF) and Loral (LOR). Globalstar is the riskier of the two, is a public company, but is about 42%+% owned by LOR, and has the same CEO/Chairman of Board, Bernard Schwartz. I read an enormous amount of information about these companies on the AOL/MotleyFool LOR board over a period of about 2 years. Much of the information comes from a very knowledgeable contributor, "Readware", who has since left the board. Also from other very knowledgeable contributors, who generously gave of their thoughts and knowledge. Readware described himself as a member of a company that advises governments and the wealthy about satellite investments.
The CEO has been described as honest, caring about shareholder value, and brilliant. (I have had independent verification of this.) He took the previous Loral (a defense company - now owned by Lockheed Martin) from near bankruptcy to a most successful company in the 24 years he ran it. (By the way, I saw the last portion of a TV report on GSTRF/LOR that you did some time ago!)
GSTRF is getting a collection of about 48 - 56 satellites up for wireless telephony covering virtually the entire world. It is especially concentrating on countries which have natural barriers to wired telephony, like China, India, Russia, etc - *large market*! It is pure telephony. Service should start mid or late 1999.
LOR is "diversified satellites". They own a company which builds satellites & sells them to other satellite companies. They bought out AT&T's Skynet for satellite TV distribution. They own 42+% of GSTRF. They are in a joint venture with Mexico's major satellite company. They are in a joint venture with France's Alcatel Alsthom, for a major undertaking involving bandwidth for computer communication. They set up their own company, CyberStar, for bandwidth/computer communication, as well. I understand that GSTRF is supposed to be the most profitable (if all goes well). But then I read that CyberStar alone should be even more profitable than GSTRF. I believe that I have forgotten several other important joint ventures!
CRITERIA
1. CURRENTLY UNDERVALUED: Because of a disastrous loss of 12 GSTRF satellites in one launching, and because of political problems due to Clinton, both stocks are cheap now.
2. *SHOULD* DOMINATE A MARKET DUE FOR EXPLOSIVE GROWTH: GSTRF has a better plan than Iridium, which is currently operating/aloft. LOR's business plan is supposed to be "brilliant".
3. PAINFULLY HONEST MANAGEMENT AND ACCOUNTING: I was told this by my broker.
4. RAZOR BLADE BUSINESSES: Both businesses will be "razor blade" businesses, in the sense that people must pay every month for service! I cannot attest to "economies of scale"!
MUST-READ articles are contained in the technology business magazine, Red Herring, over the last two years. I don't recall exact reference.
I believe these companies are about one year behind CKFR, in terms of beginning to move in the market
However, at present the problems of these companies include financial problems because of the above discussed disasters. So, while they may yet fulfill their promise, they bear careful watching! IMHO!!
