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

To: djane who wrote (3098)	2/23/1999 7:20:00 PM
From: djane	Respond to of 29987

Salomon Smith Barney IRIDIUM comment today (via IRIDF thread) Talk : Communications : IRIDF - Iridium World Communications IPO Announced! \| Previous \| ------ \| Respond \| To: Lu_Xun (1370 ) From: Jack Morgan Tuesday, Feb 23 1999 6:53PM ET Reply # of 1371 Salomon Smith Barney IRIDIUM comment today (main points, verbatim): "DESPITE SPECULATION, IRIDIUM IS NOT AMENDING BANK COVENANTS: Iridium's stock has fallen sharply in the past two days on concerns that the company could miss the targets set in its bank covenants. While the company has not yet met its targets for the first quarter (remember that half the quarter is remaining), management informed us that the company is, nonetheless, not currently in talks to amend the covenants on its bank facility. DELAYS IN HANDSET AVAILABILITY DO NOT MEAN LACK OF DEMAND: What has been disconcerting to the market (and us) is that Iridium has not reported large handset orders from the MNC's trialing the service, which increases the likelihood that the company misses a covenant. Without any press releases, the market has concluded that the subscribers just aren't signing up. One problem has been that the lack of availability of a full range of products has stifled corporate users' ability to really try out the service. The shortfall has been the main Motorola dual-mode handset, which was not shipping until mid-January. We contacted some of the MNCs that are trialing Iridium's service and found that some are still waiting to receive the dual-mode handset and pagers, meaning that they haven't been able to develop a complete sense of Iridium's value proposition and aren't in a position to make a purchase decision. By the way, we did not speak to any corporate users that have decided not to purchase handsets. These delays, in our opinion, are not indicative of demand. After all, a large order received in April rather than in March doesn't affect Iridium's long-term revenue prospects. We point out that, owing to confidentiality agreements, Iridium will never be able to report the number of handsets ordered by the US Government, the company's largest expected customer. To the extent that the Government has started to place orders, Iridium should have a boost in meeting its targets. Another point is that the corporate trials, which started in November, could result in a wave of orders starting later in this quarter and early next quarter as they begin to test the full range of products. What HAPPENS IF IRIDIUM MISSES ITS TARGET? ...the bank syndicate technically has the right to force the company into default, an event that we view as unlikely because the banks have an economic incentive to allow Iridium to prove the existence of demand. One possible scenario in the event of default is that the banks may seek additional guarantees from Motorola or higher bank fees to maintain the facility. One note on the financing side is that the company has a cash buffer of $300 million more than needed to break even on a cash flow basis. .....Iridium's price weakness has widened the valuation gap between Iridium and Globalstar. Based on current FV/PP&E ratios, Iridium trades at a 40% discount to Globalstar, which we believe is unjustified. CONCLUSION: BUYING OPPORTUNITY ON EVIDENCE OF HANDSET ORDERS: Our view is that the market is penalizing Iridium prematurely. We are reluctant, however, to encourage investors to take new positions or increase existing stakes until we see evidence of handset orders. Our expectation is that the stock will likely remain volatile and under significant downward pressure until the uncertainty relating to demand is removed. To the extent that we begin to see orders for handsets come in, we would view these levels as a compelling buying opportunity. We reiterate our Buy (1-S) rating, and maintain our $60 price target." That's it. There were a few other comments that dealt with the Kyocera phone (all of which we know), but the above is the stuff I found interesting. Jack Morgan

To: djane who wrote (3098)	2/24/1999 12:21:00 PM
From: limtex	Read Replies (1) \| Respond to of 29987

dj - OK of course all of this is guesswork but IMHO they don'y have a hope in hell of getting 200,000 paying users in Russia. Where are 200,000 potential paying users in Russia? China - 250,000 payers? Mexico and Canada - 200,000. No doubt G* is going to get customers but my view nowehere near these numbers. What do I have to base that on...nothing but observation. The US might be different. May get 100,000 or so users who go to all sorts of places where there aren't any phones AND the people still want to be in touch with the world. Maybe Berine has done some very accurate market surveys that give these massive numbers and if so I'll be veryhappy if it works out that way. The thing that could make a difference but I'm not sure of teh order of magnitude is Internet access from these phones. My guess is that the target markets arejust as likely to want Internet access as they are to want to make voice calls. Just my views and I still love the company, L