Globalstar Spot Service Brings in Revenue; Thales Arbitration Costs Cut Profits

[Satellite TODAY Insider 08-10-12] A strong performance from Globalstar’s Spot service helped boost the company’s 2012 second-quarter revenues to $20 million – a full $1 million more than the $19 million the MSS operator reported in the same period last year, according to Globalstar’s latest financial results issued Aug. 9.

   Though Globalstar made progress in its revenues during the second quarter, the company also widened its net losses from $14.1 million in 2011 to $27.5 million. Globalstar Chairman and CEO Jay Monroe said the increase in net losses was primarily due to a $22 million termination charge recorded related to its recent arbitration with its satellite manufacturer Thales Alenia Space, as well as a reduction in the value of its long-term assets of $7.1 million and an increase of $3.1 million in its depreciation expenses. The losses also were offset by a $16.6 million increase in non-cash derivative gains.
   Globalstar took some positives from the second quarter by surprising analysts with a 33 percent, or $1.6 million, year-over-year increase in Spot service revenues. The company experienced large sales volumes in the second quarter of 2011 due to the release of new Spot products early that year. In the second quarter of 2012, Globalstar’s Simplex equipment sales increased 21 percent due to growth in its commercial applications for M2M asset monitoring and tracking.
   The company’s Duplex service revenues were lower in the second quarter of 2012 compared to the same period in 2011, but both Globalstar management and the market expected the drop-off. Duplex service revenues did, however, increase approximately 7 percent from the first quarter of 2012.
   Monroe said he anticipates further Duplex revenue growth later this year as his company’s additional second-generation satellites are placed into service. “Overall, we are pleased with the results for the quarter,” Monroe said in a statement. “Revenue and adjusted EBITDA for the quarter continues to be in line with our expectations.”
   Monroe added that Globalstar needed to settle its arbitration with Thales Alenia Space in order to move forward with its new new second-generation satellites and improve its Duplex service quality. In a previous interview with Satellite TODAY Insider, Monroe said its consortium of investors and export credit financiers have been very, very supportive of Globalstar’s efforts.
   “They know that we have been able to grow our business after the delivery and launch of the Thales satellites,” said Monroe. “As we all know, Thales is far, far behind schedule and therefore, the French government has been very flexible with us in order to give us time to get to the anticipated revenue recovery, which we are able to get just by bringing our satellites into orbit and into service. In short, the problems that we have experienced are all time-based.” 

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