Abbi Adest submits: Globalstar Inc, a telecommunications firm based in California, filed an S-1 on Monday. The proposed ticker is (NYSE:GLOB). The following are key details from their SEC filing:
We are a leading provider of mobile voice and data communications services via satellite. By providing wireless service where terrestrial wireless and wireline networks do not, we seek to address the increasing desire by customers for connectivity and reliable service at all times and locations. Using our 43 in-orbit satellites and 25 ground stations, or gateways, we offer high-quality, reliable voice and data communications services to government agencies, businesses and other customers in over 120 countries.
At March 31, 2006, we served approximately 204,000 subscribers, which represented a 41% increase since March 31, 2005. We believe the heightened demand for reliable communications services, particularly in the wake of the September 11, 2001 terrorist attacks, the December 2004 Asian tsunami and the U.S. Gulf Coast hurricane activity in 2004 and 2005, will continue to drive our strong growth in sales of both voice and data services. We have a diverse customer base, including the government, public safety and disaster relief; recreation and personal; maritime and fishing; business, financial and insurance; natural resources, mining and forestry; oil and gas; construction; utilities; and transportation sectors, which we refer to as our vertical markets. According to Gartner, we are one of the two key mobile satellite services providers whose networks can deliver voice and data communication services over most of the world's landmass. Based on information provided by Northern Sky Research as to the size of the global market, in 2005 we had an estimated 10.2% share of global subscribers in the mobile satellite services industry.
We believe that our distribution network is productive and efficient and provides broad coverage over our target customer base. We utilize a large network of dealers and agents, including over 750 in territories we serve directly. We also use resellers, including independent gateway operators, to sell the full range of our voice and data products and services, including our Simplex asset tracking services, in markets where we do not market directly.
Key Finanacial Details:
We recorded $127.1 million and $30.3 million in revenue and $18.7 million and $22.5 million in net income during the year ended December 31, 2005 and the three months ended March 31, 2006, respectively, compared to $84.4 million and $24.8 million in revenue and $0.4 million and $0.4 million in net income for the year ended December 31, 2004 and the three months ended March 31, 2005, respectively. Net income for the first quarter of 2006 included an income tax benefit of $21.4 million relating to the establishment of deferred tax assets and liabilities upon our election in January 2006 to be taxed as a C corporation.
Our operating income (loss) grew from an operating loss of $3.5 million for the year ended December 31, 2004, to operating income of $21.9 million for the year ended December 31, 2005. Our operating income for the three months ended March 31, 2006 was $3.9 million compared to $2.6 million for the same period in 2005. Correspondingly, our operating income margin, which is operating income or loss divided by total revenue, improved to 17.2% for the year ended December 31, 2005, and 12.9% for the three months ended March 31, 2006. Our operating income margin for the three months ended March 31, 2006 increased 2.5% compared to 10.4% for the same period in 2005. Due to the fixed cost nature of our network, our operating income margin is particularly sensitive to increases and decreases in service revenue.
Notable Issues to Watch For:
The loss of customers, particularly our large customers, may reduce our future revenues. We may lose customers due to competition, consolidation, regulatory developments, business developments affecting our customers or their customers, or for other reasons.
Our top 10 customers for the year ended December 31, 2005 accounted for, in the aggregate, approximately 20% of our total revenues of $127.1 million. For the year ended December 31, 2005, revenues from our largest customer were $5.0 million, or 4% of our total revenues. If we fail to maintain our relationships with our major customers, if we lose them and fail to replace them with other similar customers, or if we experience reduced demand from our major customers, it could result in a significant reduction in our profitability through the loss of revenues and the requirement to record additional costs to the extent that amounts due from these customers are considered uncollectible. More generally, our customers may fail to renew or may cancel their service contracts with us, which could negatively affect future revenues and profitability.
Underwriters: Wachovia Securities
Select Competitors: Iridium, ICO Global Communications, TMI/TerreStar