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Globalstar (NYSEMKT:GSAT) Showing Strength On Buyout Rumors

Globalstar (NYSEMKT:GSAT) has risen over 80% since mid-March, and it’s currently trading well above its 200 Day Moving Average.

Driving this upward trend, the stock also surged 33% on May 12 due to reports the company was talking to advisers about a potential sale.

Also playing a factor in GSAT’s recent rise is the sale of Straight Path Communications to Verizon for $3.1 billion.

While GSAT and Straight Path both own communication spectrum, their airwaves are slightly different.

Still, a $3.1 billion price tag for Straight Path makes GSAT a precious commodity and investors want in. 

Source: StockCharts.com

On May 4th, GSAT announced Q117 earnings results and here are the highlights:

  • Total revenue for the first quarter of 2017 increased by $2.9 million, or 13%, from the first quarter of 2016.
  • Service revenue increased $2.8 million, or 15%, in the first quarter of 2017 compared to the first quarter of 2016.
  • Subscriber equipment sales revenue increased $0.1 million, or 3%, due primarily to a higher volume of SPOT units sold during the quarter, which resulted in a $0.3 million increase in SPOT equipment sales revenue. Offsetting this increase was a $0.2 million decrease in equipment sales revenue from product sales to our IGOs, which can fluctuate between periods based on demand in their respective international territories.
  • Loss from operations decreased $0.5 million, or 3%, from $15.7 million in the first quarter of 2016 to $15.2 million in the first quarter of 2017 due primarily to a $2.9 million increase in total revenue (for the reasons discussed above), offset partially by a $2.4 million increase in operating expenses.
  • Net loss decreased $6.7 million from $26.9 million in the first quarter of 2016 compared to $20.2 million in the first quarter of 2017. The primary reason for this decrease was a $4.6 million fluctuation in non-cash derivative valuation adjustments from a derivative loss in the first quarter of 2016 to a derivative gain in the first quarter of 2017.
  • Adjusted EBITDA increased 23% during the first quarter of 2017 driven primarily by a $2.9 million, or 13%, increase in total revenue, offset partially by a $1.8 million increase in total operating expenses (excluding EBITDA adjustments).

Globalstar (NYSEMKT:GSAT) Company Overview

Globalstar (NYSEMKT:GSAT) is a leading provider of mobile satellite voice and data services.

Customers around the world in industries such as government, emergency management, marine, logging, oil & gas and outdoor recreation rely on GSAT to conduct business smarter and faster, maintain peace of mind and access emergency personnel.

GSAT data solutions are ideal for various asset and personal tracking, data monitoring, SCADA and IoT applications.

The company’s products include:

  • Mobile and fixed satellite telephones
  • The innovative Sat-Fi satellite hotspot
  • Simplex and Duplex satellite data modems
  • Tracking devices
  • Flexible service packages.

Recent GSAT Milestones

While rumors of a buyout circulate, GSAT is focused on its core business of providing end users mobile satellite and voice data services:

  1. May 2017 – Announces first quarter 2017 results (see news release)
  2. April 2017 – Announces SPOT satellite device reaches major milestone of 5000 rescues worldwide (see news release)
  3. April 2017 – Announces the University of Miami will be deploying 550 SPOT Trace satellite trackers in Gulf of Mexico oceanic flow study (see news release)
  4. April 2017 – Announces initiative to use Yippy’s compression technology in new satellite software services (see news release)

GSAT Management Team

GSAT is led by a experienced management team with deep background in mobile and satellite telecommunications.

James (Jay) Monroe III
Executive Chairman of the Board of Directors and Chief Executive Officer

Jay Monroe is Chairman and CEO of Globalstar, Inc., is the founder of The Thermo Companies, and has held the Chairman position at Globalstar since Thermo’s acquisition of the Company in 2004. Jay was originally appointed Globalstar’s CEO in 2005. Mr. Monroe directs the daily operations and manages the Company’s long-term strategic growth.

L. Barbee Ponder IV
General Counsel and Vice President of Regulatory Affairs

L. Barbee Ponder IV was named General Counsel and Vice President of Regulatory Affairs for Globalstar, Inc. in July of 2010. Mr. Ponder has previously served as Senior Regulatory Counsel for BellSouth Corporation in Washington, D.C. where he provided representation before the Federal Communications Commission, Congress and the White House on issues concerning 1996 Telecommunications Act, deregulation of broadband services and tax issues concerning the telecommunications industry.

Rebecca S. Clary
Vice President & Chief Financial Officer

Rebecca S. Clary serves as Globalstar’s Vice President & Chief Financial Officer. In this role, Mrs. Clary is responsible for the Company’s global accounting and financial reporting functions. She has been with the Company since 2010. Prior to joining Globalstar, she was a manager with PricewaterhouseCoopers in its audit services practice.

Tim Taylor
Vice President of Finance, Business Operations & Strategy

Timothy E. Taylor serves as Vice President, Finance, Business Operations and Strategy of Globalstar. Mr. Taylor also serves as Vice President of The Thermo Companies, the majority owner of Globalstar. In his capacity at Globalstar, Mr. Taylor helps oversee the Company’s satellite operations in addition to providing assistance with spectrum policy before the FCC and other international regulators.

Walter Debus
Vice President and General Manager, International Sales, Canada and Europe

As Vice President of engineering and manufacturing, Mr. Debus manages the daily research, design and manufacturing activities involved in bringing new products to the Globalstar marketplace. Prior to joining Globalstar, Mr. Debus served as a engineer with a number of companies including AT&T Bell Laboratories where, as a senior level manager, he was involved in the research, design and manufacture of transmission equipment.

Jim Mandala
Vice President, Technical Operations

As Vice President and General Manager, Jim Mandala oversees the sales operations of Globalstar’s key business properties in Canada and Europe and has executive responsibility for the Globalstar Canada and Europe business operations. Mr. Mandala’s duties include charting the future growth of sales, maintaining and developing the dealer distribution network, and leading the strategic direction for those Globalstar properties.

Jake Rembert
Vice President of Sales, United States, Africa, and Central and South America

As Vice President of Sales, Jake Rembert oversees Globalstar sales and marketing in the United States, Central and South America, Africa and Asia. Prior to joining Globalstar, Mr. Rembert worked for Xspedius from 2001- 2004 and then Thermo Companies when they purchased Xspedius in 2004. He then transitioned to Globalstar when Thermo Companies purchased them in 2004 and has had numerous roles in sales prior to becoming Vice President.

Conclusion

GSAT is showing a very strong chart the past few months and could be a takeover target for a large telecommunications company like Verizon or AT&T.

Keep watching GSAT as it continues to deploy its products and services globally, and pay particular attention to any news around larger corporate developments.

Disclosure: We have no position in GSAT and have not been compensated for this article.

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