Globalstar's end in sight

After losing $3.8 billion in 2000, Globalstar may be headed toward bankruptcy, according to the satellite phone operator's recent filing with the SEC.

“We do not expect that Globalstar will be generating sufficient revenues at the conclusion of 2001 to continue operations for a significant period beyond 2001 without additional financing…. There can be no assurance that such financing will be available on terms acceptable to Globalstar, if at all,” the filing states. “If Globalstar is unable to obtain such financing, it will cease to operate as a going concern after 2001.”

Indeed, the annual report provides little hope for Globalstar, which generated only $3.7 million in total net revenue for 2000 while expending $128 million to operate.

Despite this, Globalstar does not believe it will cease operations, although the SEC filing had to notify potential risks to shareholders, according to a company spokesman.

Meanwhile, Globalstar intends to focus on vertical industries such as transportation and maritime, similar to what both Iridium Satellite and Inmarsat are doing.

But the idea of Globalstar pursuing a new market focus is wearing thin on the market.

“How many times can Globalstar change its target market?” said Karenin Jelalian, senior analyst at The Strategis Group.

“The company had a year to prove itself. Early in 2000, it kept saying, ‘Wait until next quarter,’ again and again and, still, it hasn't gained any traction.”