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: CommSatMan who wrote (4435)	5/3/1999 1:12:00 PM
From: Rocket Scientist	Read Replies (2) \| Respond to of 29987

Thought I'd add a few more drips to the waterfall of opinions drenching this thread: 1. On demographics. As someone who has travelled some in the second and third worlds, I side with those who consider this market to be huge for Globalstar. Americans tend to form opinions about these regions based on what they see on CNN, and it's an incomplete picture. My firm impression (unquantifiable, I'm afraid) is that there are plenty of people that can afford and would like to have mobile phone service outside the US, where it just isn't available. Off hand remarks like "most people live in cities, most cities have terrestrial cell systems, so who needs a sat-phone," are, respectfully, a little shallow. The world is a big place, and there are more people with money in it than you imagine; many of them live in, work in or travel frequently to places without cell phone service. Think poor countries don't have plenty of rich people? Try this simple test: go to any upscale tourist attraction in any major Western city with someone who recognizes Russian. Count the number of Russian speaking visitors you overhear in an hour-you may be surprised. 2. On market and pricing for early adapters. I suggest that the early adapters of G* will be large organizations as opposed to individual consumers and small entrepreneurs, and the users of the phones bought by those organizations will be insensitive to the cost per minute. Many of them will never see a monthly charge statement, and those that do will naturally believe that cost of the air time they used was less valuable than the information they conveyed (or convenience they enjoyed.) Why? Because someone else paid for it! G* should market government organizations of all types and large companies. After they've sold 1-2M phones to those users, and gotten they're fixed costs covered, will be time to worry about cutting prices to attract individuals and small businesses. By then, the intrinsic cost of the handset should be way down, too, due to benefits of mass production, etc. 3. On fixed terminal service. My view is that this business is less promising than some suggest, because there are cheaper ways to provide essentially the same utility. GeoSat service to rural communities can be provided much more cheaply; sure the call quality is poorer, but if we're talking about truly poor villages (and there are countless thousands of them) that never had a phone before, call quality won't matter much. G* will face growing competition in this sector, IMHO, and if it can fill its system with mobile users (which pay more) it will be better off, anyway. 4. On Iridium. I take no pleasure or financial benefit from it, but I believe Goodboy's analysis is essentially correct. IRID equity is at very high risk of becoming worthless. After reading his analysis and taking a quick look at IRIDs 10K, I suggest the essential reason isn't TDMA vs CDMA or crosslinks vs bent pipes, but that Motorola has systematically stacked the decks against IRID. Mot is sucking money out of Iridium with a firehose: What is this O&M contract for 600M$ per year? That's nearly half of Loral's gross revenue, for which LOR builds and operates 6-8 GEOs each year, plus designed and built G* (over several years.) Loral has about 3900 employees and huge subcontracts and it only manages to annually spend at two times the rate of MOTs O&M contract. And can you imagine Loral saying, as Mot recently did, well, we'll have to see IRID (GLP's) business plan before we decide what to do next? I could go on, but I think the point is clear enough: GSTRF s/h interests are much better aligned with GLPs which are better aligned with the LP's founders than can be said of IRID. It's too bad, for IRID s/h and for the industry at large, for the obvious reasons that IRIDs problems are making capital more expensive or unavailable for a lot of other projects, including G. 5. On competition. I don't believe or hope that G will become the only supplier of satellite mobile telephony. Iridium (in some restructured form) will provide service and ICO and maybe another will come along and probably prosper. Monopolies are difficult to sustain and not usually that healthy for the monopoly holder or the customer. The natural early adapters of G/IRID are institutions that loathe sole source procurements. For that reason, I think it's actually been bad for IRID that G was delayed. Being sole source has probably slowed IRID's potential customers from making a buy decision. If there had been robust competition these last 5-6 months, IRID, G* and their customers would both know concretely what the real market price for various classes of service was. 6. On the future. I think it's brighter than we can imagine. Look at the 30-40M population that G* considers it's "addressable" market (i.e., those that could afford the service). This population is maybe 1-2 % of the total world population without wireless phone service-to me, that means Gs long term addressible market is much, much higher; as standards of living in the undeveloped world improve the 30-40M will constantly grow at the "frontiers" of the world's infrastructure, and (IMHO) at a much higher rate than build out of terrestrial cell systems shrinks the utility of G to the early adapters. To all of different opinions (probably everybody here, on one point or another,) please know I value and appreciate your thoughts. As someone (who?) once said: without differences of opinion there would be no horse races and no stock markets (and one might add: no interesting bulletin boards.) Regards, RS