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

To: JGoren who wrote (4706)	5/19/1999 3:35:00 AM
From: Maurice Winn	Read Replies (2) \| Respond to of 29987

JGoren, quite right that the partner-carriers don't have interests aligned completely with Globalstar on this, but their interests are near enough that it doesn't matter. The carriers have gateways to pay for so they do have some upfront expenses to justify. Others have pointed out that opportunity cost weighs lightly on companies and I'm sure that will be true in this case too. Much more lightly than having billions in money already out the gate and needing a return on investment, which is the situation for Globalstar. To cut through the jargon, if a service provider [carrier] doesn't bother selling the service vigorously, they won't lose money, they will fail to earn it. But their return on investment won't look bad if their other investments are good. The service providers who also own shares in Globalstar have more investment to justify, but not to a very serious extent. Certainly they won't want to sell minutes cheaply if others are selling them at a high price because that would mean they'd make little money on the minutes and get only a small share of the revenue from Globalstar overall. Where this high price idea goes wrong for the service providers is that if there is a lolly scramble for the minutes and they mess around with high-priced minutes and handsets, they'll find their competitors in other regions gobble up the minutes and handsets and they are left with few customers. That won't matter from a profit point of view for the first two years, because those taking part in the lolly scramble won't make money either. But in two years time, when the constellation is filling and the minute price goes up to 50c, they will still have few customers and the lolly scramble regions will have millions of customers who will start paying serious money. Guess which service provider will make the money then! So the key to Globalstar success is that Globalstar Service Providers are in a competition with each other as well as ICO [and Iridium for the purists]. Those Service Providers who are tardy in getting market share will regret it in a couple of years. If Globalstar holds the price up initially and slows demand, letting ICO get in, then all the Globalstar participants will regret it. Globalstar can't lose by holding a huge, world-wide lolly scramble. The minutes are costing nothing anyway as they are already there. Consumption is the name of the game. As the price reduces, consumption zooms up! Once consumption is up, the stable market price can be found. Competitors and sluggish Globalstar Service Providers will be left scrambling. If partner-carriers don't like it, they can get a job servicing the Globalstar shareholder's Lexus, Jaguar and BMWs. I won't want them servicing my Gulfstream though because if they can't sell Globalstar minutes, they probably won't be much good at refuelling and cleaning an aircraft. Maurice