[Via Satellite 10-10-2014] In a conference call to address the targeted and strongly worded claims of Kerrisdale Capital against Globalstar, company CEO Jay Monroe, along with John Dooley, founder and managing director of Jarvinian, set out to refute the recent claims against the business case and the value of Globalstar’s upcoming Terrestrial Low Power Service (TLPS). In a 67-page research note, Kerrisdale calls Globalstar’s equity “worthless,” claiming at the very beginning “it takes little more than a rudimentary understanding of wireless communications to realize that.”
Globalstar’s stock has been subject to volatility following rumors that Kerrisdale would disclose a short position, which it did, along with a related thesis and presentation. Following the sharp drop in share value that resulted from the Kerrisdale report the company’s stock received a slight boost from the presentation. Monroe responded with a strongly worded rebuttal, accusing the investment management firm of maliciously seeking to bring the company down, along with its investors.
“The presentation we saw from Kerrisdale the other day is fundamentally flawed and it’s wrong,” said Monroe. “What is clear is that Kerrisdale has completely mischaracterized a combination of industry facts and Globalstar’s long-term spectrum and operational prospects all for its personal gain.”
Central to the call was the long-term value of Globalstar’s 2.4 GHz band, which the company intends to use for the TLPS Wi-Fi service. Kerrisdale claims this band is of no value, and that even with Federal Communications Commission (FCC) certification — expected later this year — it has no financial value, alleging that Wi-Fi congestion is not a problem, nor would TLPS solve it.
“The irrelevance of TLPS will be reinforced by the rapid ascent of the next-generation Wi-Fi protocol 802.11ac, which operates exclusively in the 5 GHz band and will achieve performance that the 2.4 GHz-only TLPS could never match,” wrote Kerrisdale. “Ultimately, TLPS is nothing more than GSAT’s latest gimmick to stave off bankruptcy.”
Globalstar responded citing Cisco, Google and Microsoft on the need to address Wi-Fi congestion. According to Globalstar, this congestion will only continue to intensify and expects it to become worse over time. The company claims the migration to 5G has been made “out of need, not out of want,” and that that even still 5G could never serve as a replacement.
Monroe said Thermo Capital Partners has invested more than $600 million into Globalstar and has never sold any shares. He also claimed Kerrisdale’s comparisons to Iridium’s capital raise were invalid since Globalstar’s next-generation constellation is already in place.
Dooley contributed significantly, stating “5G is not a replacement for 2.4 GHz, nor is it something that shall ever be a carrier access mechanism. It is something that shall always be a compliment for these services, and for that it’s very valuable, but that is simply all it is, and all it ever will be.”
“The capabilities of [the 2.4 GHz band] cannot be replicated or mitigated by 5G,” added Monroe. “TLPS is the only service of its kind. TLP is not only a superior solution, it is an immediate solution that can be effectively and immediately deployed.”
TLPS is located in between AT&T’s Wireless Communication Service (WCS) and Sprint’s Educational Broadband Service (EBS) spectrum. Globalstar claims its satellite spectrum, juxtaposed next to the Public Wi-Fi band, would increase the availability of Wi-Fi capacity by a third. Testing of the service has also proven it to achieve four times the throughput capacity of Public Wi-Fi. These, among other reasons, were used to assuage investor concerns and to validate the profitability of this service.
“The more compromised the local Wi-Fi resource, the greater improvement from using TLPS,” said Monroe. “This is a service that people will pay for.”