Globalstar, Inc. Q2 2008 Earnings Call Transcript

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Globalstar, Inc. (GSAT)

Q2 2008 Earnings Call

August 11, 2008 5:00 pm ET

Executives

Dean Hirasawa – Director, Public and Investor Relations

James Monroe, III - Chairman of the Board and Chief Executive Officer

Fuad Ahmad - Chief Financial Officer and Senior Vice President

Anthony J. Navarra – President, Global Operations

Presentation

Operator

Welcome to the Globalstar earnings conference call. (Operator Instructions) I would now like to turn the call over to Dean Hirasawa, Director of Public and Investor Relations.

Dean Hirasawa

Thank you for joining us for today’s conference call to discuss the results for Globalstar, Inc. for the quarter and six months ended June 30, 2008. Before we begin please note the following. This call may contain forward-looking statements within the meaning of Federal securities law. Factors that could cause results to differ materially are described in the Safe Harbor section of today’s press release and in Globalstar’s SEC filings including the quarterly report on Form 10-Q for the three months ended June 30, 2008 which will be filed later today.

Both the press release and this conference call include discussions of certain non-GAAP financial measures as defined under SEC rules. We have provided a reconciliation of each of those non-GAAP measures to the most comparable GAAP measure in the press release. Please note that the information in this call is accurate only as of the date of this live teleconference which is Monday, August 11, 2008. Today’s press release containing certain financial information is available on the company website at www.Globalstar.com. Later this afternoon an audio recording of this conference call will be available via telephone dial in and a web cast recording will also be made available on the company’s website.

Presenting today will be Jay Monroe, Chairman and CEO of Globalstar, Inc.; Fuad Ahmad, Senior Vice President and CFO; and Tony Navarra, President of Global Operations. Also joining the call today is Thomas Colby, Chief Operating Officer of Globalstar. All four gentlemen will be available following the prepared remarks to take questions as time allows.

At this time I would like to turn the call over to Mr. Monroe.

James Monroe, III

Thank you all for joining today for Globalstar’s quarterly earnings call. There is now less than one year to go before we take delivery of our first second generation satellites and as a result we have been extremely busy here at Globalstar. There’s a lot of material to cover so let’s begin.

Before discussing the four areas of the business which we update quarterly let me mention where Globalstar sits within the now rapidly changing wireless telecomm state and what that means for our satellite business. As everyone knows the global market or wireless voice and data services is growing rapidly. Today roughly 3 billion of 6 billion people in the world have mobile phones or mobile data devices and last year there were 700 million sold compared to only 200 million computers. What we’re living through is a computing shift from the desktop to the mobile device as mobile phones become ever more capable.

As many emerging markets once skipped over land line phones altogether and went straight to wireless because the wireless infrastructure was so much less expensive so fast sections of the world today are beginning to skip the computer altogether and go straight to less expensive mobile computing devices. So called smart phones are growing at approximately 100% per year as evidenced by the extraordinary success of the iPhone and the Blackberry which are basically just small computers. Everywhere productivity and rise in GDP are directly linked to the availability of good communications and the availability of reliable data systems. Nowhere is this more true than in emerging and remote markets.

For people outside of terresterialist wireless range all of these services can now go over Globalstar’s network in part because the consumer devices can shortly be manufactured cheaply enough to economically address markets such as China, India and sub-Saharan Africa. Additionally our spectrum can be used by terrestrial wireless companies to augment their own where they might be spectrum constrained. Only a relatively small percentage of the world’s land mass actually has wireless and cellular infrastructure. This where Globalstar comes in. Our access to those un-served areas and the 3 billion people who are currently unconnected costs about 1/100^th of a wireless terrestrial build out to un-served populations. This makes Globalstar a true low cost provider of voice and data and sine our system is 850 miles in the air it is relatively immune to the geo-political and natural disaster risks affecting terrestrial wired or wireless networks.

Over the past few years we have been planning the new Globalstar compilation and the supporting technologies around it. We believe that the growth and the collusion in the global wireless business has favorably changed the traditional MSS to voice and data marketplace. Globalstar recognizes change and responded with new low cost wireless product such as the SPOT Satellite Messenger which we saw launched late last year. Also recognizing the potential to enhance that business we have contracted with Hughes Network Systems to design new, low cost chip sets to power our new products. Far from the past when satellite phones and data devices were large and expensive this revolutionary new chip set will be available for a fraction of the cost previously associated with integrated satellite capability.

To enable this multi-mode technology we will be licensing the chip sets at a nominal cost to anyone who’d like to embed satellite connectivity into one of their devices. This creates a convergence at the device level of both wireless and satellite voice and data capabilities and we expect this to make satellite access available within other’s devices for as little as $20 of added material cost. We expect to also offer the world’s most cost effective satellite only handsets to our commercial and industrial markets based upon our new Hughes architecture. These are just a few of the reasons why we are so bullish about Globalstar’s future.

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