Strategic Analysis of Globalstar

I. Introduction

A. Business Case

Globalstar Inc. is a leading provider of global mobile voice and data communication services globally through the use of satellites. Globalstar currently utilizes 36 in-orbit satellites and 24 operational ground stations to offer their voice and data services. They refer to this network of satellites and gateways as the Globalstar System. The Globalstar constellation is comprised of Low Earth Orbiting (LEO) satellites that pick up signals from over 80% of the Earth's surface, excluding the extreme polar regions and mild-ocean regions.[ Globalstar Inc. 2011 Form 10-K]

Globalstar was incorporated in Delaware in 2006. Globalstar's headquarters is located in

Covington, Louisiana and they currently have 239 employees. Their products and services are currently sold, distributed, or available in over 120 countries around the globe. Globalstar provides these products and services to several markets, including: recreation and personal, government, public safety and disaster relief, oil and gas, maritime and fishing, natural resources, mining and forestry, construction, utilities, and transportation. At the end of 2011, Globalstar served approximately 486,000 subscribers.[ Ibid] [ Bruns, Adam. "Project Watch." Site Selection. http://www.siteselection.com/ssinsider/pwatch/Super-Summer.cfm (accessed March 29, 2012).]

Globalstar provides satellite communication through various services. They offer two-way voice communication and data transmissions, referred to as "Duplex," between mobile or fixed devices as well as one-way data transmission between mobile or fixed devices, which include their "SPOT" family of products and their "Simplex" products. Globalstar offers equipment for each of these services designed to work on their satellite network.[ Globalstar Inc. 2011 Form 10-K]

They are currently completing the process of launching their second-generation satellites, which are forecasted to be fully operational by the end of 2012. This satellite constellation is designed to increase service level results to make their products and services more desirable to current and prospective consumers. The FCC has authorized Globlastar to operate their first-generation satellites in 25.225 MHz of radio spectrum and operate their four domestic gateways in the 5091-5250 and 6875-7055 MHz bands. Globalstar has licensed and registered their second-generation satellite constellation in France. They received approval by the FCC to operate their domestic gateways for these second-generation satellites in March 2011.[ Ibid]

Globalstar conducts sales through various outlets. They have a sales group that is responsible for leading direct sales with primary accounts and managing agent, dealer, and reseller relationships. Aside from reseller channels and dealers, Globalstar also offers products and services directly to the end-user, through their existing sales force and through the use of their e-commerce website. Specific products are available for sale at large retail stores, such as Best Buy and Wholesale Sports.[ Globalstar Inc. 2011 Form 10-K]

Globalstar competes in the Mobile Satellite Services sector of the Satellite Industry, within the larger Global Communications Industry. In 2009 Globalstar acquired Axonn, their principal SPOT products supplier, to help them become vertically integrated and cut costs. Spot LCC, is a wholly owned subsidiary of Globalstar, Inc.[ "SPOT Connect Satellte Communications App Available on App Store." Press Release- Globalstar. http://www.globalstar.com/en/index.php?cid=7010&pressId=667 (accessed March 29, 2012).]

B. Brief History

The original Globalstar plan was launched in 1991 as a joint venture led by Loral Space and Communications and Qualcomm Incorporated.[ "Globalstar Files for Bankruptcy ." Space and Tech. http://www.spaceandtech.com/digest/flash2002/flash2002-012.shtml (accessed March 29, 2012).] In 1994, Globalstar L.P. was created, with primary partners including: Loral Space and Communications, Qualcomm Inc., China Telecom, and DaimlerChrysler Aerospace and Vodafone Group PLC. Globalstar's first generation satellite network, originally owned by Globalstar, L.P. (which they now refer to as "Old Globalstar") was built and launched in the late 1990s. After spending approximately $4 billion launching the network, Globalstar, L.P. filed voluntary petitions under Chapter 11 of the United States Bankruptcy code in February of 2002.[ Wallack, Todd. "San Jose's Globalstar files for bankruptcy." San Francisco Chronicle. www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/02/16/BU62621.DTL (accessed March 29, 2012).] In 2004, Thermo Capital Partners LLC, a firm that operates companies in a variety of sectors, became Globalstar's principal owner in the acquisition of the business and assets of 'Old Globalstar.'[ Globalstar Inc. 2011 Form 10-K]

Globalstar was formed as a Delaware limited liability company, and later converted into Globalstar Inc., in 2006, bringing new life to Globalstar. Globalstar completed their initial public offering in 2006, offering one million shares at $17 per share. The stock began trading on the NASDAQ under the symbol GSAT.[ "Globalstar Prices Its IPO." Satellite Today. http://www.satellitetoday.com/st/headlines/10764.html (accessed March 29, 2012).] Beginning the same year, Globalstar began designing and manufacturing their second-generation satellite constellation. Since the launch of their first generation satellites in the late 1990s, the satellites have experienced various issues such as the degradation of performance which adversely impacts the ability of the satellites to provide reliable communication. The satellite deterioration has significantly impacted the reputation of Globalstar and many consumers began purchasing from their competitors. In order to lessen the impact on sales, Globalstar launched eight-spare first generation satellites in 2007, to help support their Duplex, Simplex, and SPOT services communications platforms. The company is confident that these eight satellites will be fully operational through at least 2013. Anticipating the eventual need for new and more advanced satellites, Globalstar entered into construction and launch agreements for the second generation satellites. Globalstar launched 18 of the initial 24 second-generation satellites in 2010 and 2011. They plan to launch the remanding six satellites before the end