World Surveillance Group Inc (fka WSGI)

[WildWest]

Gsat news will impact WSGI/GTC efforts to raise funding for ground stations. Slowly but surely the business plays out....imho

http://seekingalpha.com/article/1694362-globalstars-fcc-milestone-could-advance-talks-with-amazon?source=yahoo

Globalstar's FCC Milestone Could Advance Talks With Amazon
Sep 15 2013, 08:14 | 5 comments | about: GSAT.OB, includes: AMZN
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Disclosure: I am long GSAT.OB. (More...)

Two weeks ago, we added Globalstar (GSAT.OB) to our Poised To Triple Speculative Portfolio via an initiation piece we released on Seeking Alpha. Our selection came on the heels of reports that Amazon (AMZN) had tested GSAT's satellite-based network. According to Bloomberg, Amazon is seeking to create "a more comprehensive user experience, encompassing how consumers get online, what device they use to connect to the Web and what they do on the Internet."

Since that time, the company announced a milestone decision made by the FCC, which sent the stock soaring 28% on Monday. This article will provide an update on what the announcement was and why the stock's reaction is just the beginning for our "poised to triple" pick.

Starting with the original Amazon news, many investors asked us why Amazon would test a satellite-based network. From our purview, the answer was simple - Amazon, Google (GOOG), Apple (AAPL) and Microsoft (MSFT) are in a race to rule the world of digital commerce. The latest mobile operating systems are being designed to run on virtually any electronic device. In other words, these tech heavyweights want to gain as much market share control over consumers' activities as humanly possible. Because of this, a broad array of consumer devices will be required to win the market share battle.

Of course, Amazon has confirmed this by virtue of its involvement in the tablet market (via the Kindle Fire). It is also widely known that they are developing a line of smartphones. For those familiar with Google's Project Loon, it becomes pretty clear why AMZN would like to provide its own orbit-based network services. Make no mistake, these companies are matching one another, move for move.

The implications for GSAT are significant. They already have the network. They just need the FCC's approval to utilize their spectrum to enable the type of services AMZN is looking to provide. In our initiation piece, we said:

"Assuming a favorable FCC ruling, we believe that several parties in addition to Amazon would be interested in Globalstar's network. At present, Globalstar's market valuation currently stands around $300 million. Adding the potential value of its spectrum to the value of its core business implies that the value of GSAT's stock could ultimately increase by approximately 600% to $2.2 billion."

Well, it didn't take long for things to start going right for the company (and its stock). On Monday, the company announced that the FCC has placed Globalstar's requested notice of proposed rulemaking on circulation for consideration by the full Commission.

The final decision on this matter will greatly impact the value of GSAT. Three bureaus are involved -- the Wireless Bureau, the International Bureau, and the Office of Engineering and Technology. The International Bureau regulates the satellite service, the Wireless Bureau regulates all wireless services, and because the ISM band and license spectrum is also involved, the Office of Engineering and Technology has to weigh in.

The significance of Monday's announcement is that GSAT can now be presumed to have the support of interim FCC Chairwoman Mignon Clyburn (because she circulated the item). When combined with support from the Wireless Bureau and the International Bureau, our understanding is that only two more people (Clyburn's colleagues) need to lend their support: Mignon Clyburn, the acting chairwoman of the FCC has circulated a draft of the new rules to commissioners Ajit Pai and Jessica Rosenworcel.

PTT Research consulted with an industry expert who indicated that items such as these rarely reach this phase without going through.

If he's right, GSAT could get a ruling within the next couple of months. At that point, formal proceedings would begin, including allowing public comments. If the company is getting through these approval processes, we would view the aforementioned $2.2 billion as an appropriate valuation.

In the meantime, we're encouraged by the progress GSAT has made in its existing business. Technically, this is the "boring" part of their story, but it has been growing and puts a floor under the value of GSAT's stock (limiting investors' potential losses). That being said, we remain encouraged by the FCC's movement and Amazon's interest in GSAT's network. We would also note that Oceus Networks has recently requested an experimental license to conduct tests with the goal of potentially provisioning services to the Department of Defense.

In short, GSAT currently has a revenue-generating business that justifies its current valuation, in our opinion. It also has a major opportunity moving through the FCC that stands to deliver triple-digit returns to investors. Investors should keep in mind that this is a speculative issue. If the FCC doesn't approve of GSAT's aspirations, the shares will likely shift to solely reflect the value of its current business. However, we are optimistic. Accordingly, we maintain our belief that shares of GSAT are poised to triple.