Globalstar
Q2 Earnings Reported
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For the second
quarter of 2000, Globalstar reported 1,137,000 billable minutes of
use, increasing gross service revenues 172%, to US$483,000. The
net loss for the quarter was US$217,716,000. Revenue from
royalties, which are tied to phone sales by manufacturers, totaled
US$318,000 for the second quarter. For the quarter, spending on
operations and interest expense was US$97 million, down from
previous quarter burn rates of US$125 million.
Globalstar claims
that the quality of service continues to exceed user expectations
and customer satisfaction remains high, with consistent positive
reports of superior call completion and retention rates. In the
U.S., the "churn rate" (the percentage of customers who
cancel their service) is substantially lower than the typical
cellular service churn rate.
At the end of the
second quarter, Globalstar had 17 gateways in revenue service and
an additional four that had completed the system testing process.
Globalstar continues to add gateways “pretty much on schedule”
with an additional seven to be added by year end. Globalstar
currently sells phones and service in 39 countries and calls can
be made and received in an additional 36 countries served by
existing gateways but where distribution channels are still being
established. Globalstar’s 52-satellite constellation continues
to operate without any problems. The satellites, launched with a
seven-and-a-half year design life, are now expected to remain
on-orbit for at least ten years.
Globalstar is
participating in In-Flight Network (IFN), a joint venture between
News Corp. and Rockwell Collins to offer Internet access and
real-time entertainment on-board planes. Globalstar was originally
to provide the downlink from the aircraft to the data centers.
However, since the initial non-data package agreement, Globalstar
has been asked to consider feeding the actual downlink into the
plane, including fax, computer interface capability, and Internet
access initially at 200 kb/sec., evaluating ratcheting up to 600
kb/sec.
As
of June 30, 2000, Globalstar had US$463 million in cash and
expects to end the year with a cash balance in excess of US$100
million.
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