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

To: Larry L who wrote (2781)	2/4/1999 4:27:00 PM
From: Maurice Winn	Read Replies (3) \| Respond to of 29987

Sure enough, Qualcomm doesn't have a monopoly on all CDMA and perhaps there are variations which Motorola can come up with for Iridium 2. It seems likely but it won't be easy for them and time is of the essence. I doubt that they can come up with something better than Qualcomm's so they won't get competitive advantage from their CDMA version over Globalstar. While Iridium can cut their price as competition comes on, they certainly can't lower their prices to Globalstar's so they are stuck with a price disadvantage, which they'll have to sell by coverage or other merits they have which Globalstar doesn't [for the next few years anyway]. I fear Globalstar is going the same way as Iridium - not enough handsets, which they'll sell too cheaply and overcharge on minutes. We'll just have to wait to see how many people want to pay for high-priced service. Maybe I'll be surprised. I do think there will be enough for Iridium to make a great return on capital employed. Which is far from saying they'll be able to compete as LEO technology develops with Qualcomm's CDMA in the lead [which I know is a bit of a joke when it is still all stuck on the ground or crashed in the Siberian wilderness]. One or other will get the better return on capital and have the better technological road ahead. One will be the winner and one the loser. Prospective shareholders should be careful though, because you buy the shares at market price. You don't pay just the price of the capital employed. So Iridium might be by far the better investment for a new shareholder if Globalstar shares have been bid up to 10 times the capital employed whereas Iridium, which people might think is a long term loser, has a market capitalisation of only 2 times the capital employed. I hope nobody misunderstands my winner and loser argument and misplaces their investment as a result! Maurice