Globalstar Says Short Seller’s Criticisms Are FlawedScott Moritz
Globalstar Inc. Chief Executive Officer Jay Monroe said a short seller’s recent criticisms of his satellite-phone company’s main assets are “flawed and wrong.”
Globalstar has valuable wireless airwaves that, if approved by regulators, can provide an immediate solution to Wi-Fi network congestion, Monroe told investors on a conference call today.
Kerrisdale Capital Management LLC, looking to profit from a drop in Globalstar’s stock price, issued a 66-page report and hosted a 3 1/2 hour presentation earlier this week that sought to show how the company’s airwaves and equity are worthless. Among Kerrisdale’s chief arguments is that the U.S. has a glut of the type of Wi-Fi capacity Globalstar hopes to make available.
“The underlying facts of Kerrisdale’s thesis are wrong,” Monroe said. “Wi-Fi congestion is real and must be addressed.”
“There’s no additional spectrum that’s ready for immediate use,” Monroe said.
Globalstar is awaiting a decision on whether the U.S. Federal Communications Commission will allow the Covington, Louisiana-based company to offer mobile broadband service over its airwaves reserved for satellite use.
In the week since Kerrisdale’s Chief Investment Officer Sahm Adrangi said he was going after his “best short idea” since joining the firm, Globalstar has lost $1.5 billion in market value as its shares have fallen 43 percent.
Adrangi said earlier this week that even if the rules change, the spectrum wouldn’t be profitable in today’s Wi-Fi market. Kerrisdale, which has $300 million in assets under management, hasn’t disclosed the size of its short position in Globalstar.
Globalstar provides satellite phone service covering more than 80 percent of the globe. The unprofitable company has struggled with high costs of launching rockets and maintaining networks to serve a niche user base and had about $632 million of debt as of June 30. In 2002, its predecessor company filed for bankruptcy protection.