Long Days In Debt Lying Ahead For Globalstar, Inc. (NYSEMKT:GSAT)

[[tagnumber 0]][[tagnumber 1]]When Globalstar, Inc. (NYSEMKT:GSAT) announced its earnings report on May 8, its stock had just undergone a three–week free fall that started on Apr. 15. A few days later, on Apr. 28, the chart formed a bearish crossover, thus giving a string sell signal. Following the publication of the 10–Q, GSAT spent a few days on the rebound, only to drop again yesterday.[[tagnumber 2]] [[tagnumber 0]]Closing trade at $2.42 per share, GSAT lost 5.47% in value in the first trading day of the week as 2.3 million shares changed hands, well below the 3.4 million average. During Q1, Globalstar registered a slight improvement both in terms of revenue and operating expenses. The company reported a net quarterly loss of $130 million, which is a 48% improvement on an annual basis, mainly due to the fact that GSAT‘s derivative loss shrank from $209 million in Q1 to $107 million in the corresponding quarter in 2015. The derivative loss is based on various debt instruments such as notes and warrants used by the management to raise capital.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 6]]Speaking of capital needs, GSAT closed Q1 with a working capital deficit of $30 million and, even though the company has doubled its cash reserves to $13.6 million since Q1 ‘14, it might have trouble paying off its short–term debt without raising new external capital. When it comes to long–term debt (including derivative liabilities), the report shows no positive developments. On the contrary, Globalstar‘s monetary obligations stretching beyond the next twelve months have shot up by a whopping $109 million to $1.17 billion.[[tagnumber 2]] [[tagnumber 0]]Globalstar is a satellite communications service provider rendering fixed and mobile voice and data services around the world. The company‘s tangible assets are evaluated at more than $1.1 billion. Nevertheless, GSAT‘s total stockholder equity as of Mar. 31, 2015 is a negative $40 million. To improve its financial situation, the management of the company will need to figure out how to improve revenue, on the one hand, and how to optimize expenses, on the other, so that the operating income goes in the black. For the last four quarters, the latter has always been a loss that has averaged $24 million.[[tagnumber 2]]