Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jonathan Chaplin - JP Morgan.
Jonathan Chaplin – JP Morgan
Jay I think you said there had been 40,000 orders for SPOT. How does that equate to actual shipment? Have all those been put into inventory in distribution outlets? If you can give us an idea since the end of the quarter what the sales of those devices have looked like that would be really helpful.
Then I’m wondering if you can just give us a quick view of what the cash contribution per SPOT device sold and connected is and what that could contribute in cash flow for 2008? Finally, I’m wondering if you have any comments, we just saw Clearwire, Sprint and the cable people do a deal somewhere between $0.27 and $0.35 per megahertz pop. Nextwave is looking to sell their 2.5 ghz spectrum. They are talking about values between $0.40 and $0.55 per megahertz pop.
I’m wondering if you could, it just seems like there is a very wide gulf in spectrum valuations between those values and what your spectrum is getting and it seems from a utility perspective the spectrum is actually pretty similar. I’m wondering if you have any thoughts on that.
Finally, I’m wondering if there have been any transactions recently in international markets that could help investors get a handle for what the international spectrum is worth. I believe there may be have been some auctions in some Asian countries that might have set up our spectrum values there.
Jay Monroe
First, the general contribution per unit this product has a relatively high margin product on the service. We expect it to be about a 90% margin on the service revenue. In the service revenue range is between $100-150 per unit per year. On the device itself depending upon where it is sold in the channel the price to us ranges between $169 and as little as about $100. The average is presumed to be approximately $110 per unit. The cost of manufacturing and landing that unit is approximately $80. So that is the margin equation for that question.
When you go to the question of the spectrum values I can’t explain the wide gulf as you referred to it in the difference between our spectrum value and the values accorded other companies at this time. I think I have explained at least my best view and am interest in other people’s views about why Globalstar’s stock would trade where it does relative to those values.
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