Kerrisdale's Case Against Golbalstar (GSAT) Still has Serious Flaws - Chardan Capital
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Chardan Capital affirms Golbalstar (NYSE: GSAT) at Buy with a $6 price target following recent commentary submitted by Kerrisdale Capital to the U.S. FCC.
Analyst James McIlree commented,
We believe the letter is more for the benefit of investors, and not the FCC, since the comment and reply comment periods for the NPRM have long past and Kerrisdale adds nothing new to the docket. We suspect the real purpose of the letter is to create additional uncertainty and doubt for bulls since it creates the impression a short seller, quite late to the NPRM process, could have an impact on the FCC's decision. While the short argument is extensive and clearly well-researched, we continue to believe the thesis is seriously flawed from a regulatory, market and technical basis...
Kerrisdale continues to make much of Globalstar's claim TLPS will increase capacity by 33%. Globalstar arrives at this conclusion by looking only at the 2.4GHz ISM bands, where the number of channels would increase from 3 to 4 or 33%. Kerrisdale assumes the 5GHz UNII bands are equivalent to the 2.4GHz ISM bands so TLPS only increases “capacity” by 1 channel from a base of 25, or by 4%.
Kerrisdale simply asserts 5GHz UNII channels are equivalent to 2.4GHz ISM, ignoring the significant differences between the two bands while Globalstar (and the laws of physics) points out the major differences between the 2.4GHz ISM band and the 5GHz UNII bands. In Globalstar's presentation last week it pointed out the significant differences between the two bands, including the advantages of 2.4GHz’s propagation and attenuation characteristics. There are also differences in power limits and in the primary allocation of use since priority of use in the 5GHz UNII bands are allocated to a variety of other users, which limits the usefulness of the 5GHz UNII bands to unlicensed users. In only a very limited sense is a 20 MHz channel at 5GHz equivalent to a 20 MHz channel at 2.4 GHz.
Globalstar closed at $2.56 yesterday.
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Related EntitiesChardan Capital Markets, Kerrisdale Capital
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