Globalstar Loses 12 Satellites in Crash
Globalstar Telecommunications Ltd. said Thursday that it lost 12 satellites worth $180 million when a rocket failed during launch, delaying completion of its $2.6-billion satellite-based global communications network.
News of the loss, although covered by insurance, sent the San Jose-based company’s stock plunging $7.13, or 40%, to $10.75 in heavy trading on Nasdaq.
Shares of Loral Space & Communications Ltd., which owns 42% of the Globalstar consortium, fell $5.06, or 28%, to $13 on the New York Stock Exchange, also on heavy volume.
A Globalstar spokeswoman said she could not provide any details regarding the accident’s financial impact on the company, which was still being assessed.
Globalstar said it was reviewing its options regarding future launches for its system, which is designed to provide cell phone and other communication services around the world.
Several other telecommunications companies besides Loral have invested in the system, including U.S. companies Qualcomm Inc., which holds a 6% stake, and AirTouch Communications Inc., which owns about 5%.
Globalstar had planned to have a 48-satellite network ringing the globe by the middle of next year, and said it still hoped the system would be operational by the end of 1999, perhaps using just 32 satellites.
The setback came a day after one of Globalstar’s main competitors--Iridium, a consortium led by Motorola Inc.--delayed the commercial start of its global satellite communications system by more than a month to complete testing and make refinements to the $5-billion venture.
The Globalstar loss also followed PanAmSat Corp.’s loss of a satellite during launch last month and the failure of one of PanAmSat’s orbiting satellites that temporarily interrupted pager services for millions of people across the United States.
Globalstar’s 12 satellites, which cost about $15 million apiece, were destroyed when a computer malfunction caused a Ukrainian-made rocket carrying them to crash shortly after launch from the central Asian country of Kazakhstan.
It was the first time that Globalstar had launched satellites using a Zenit rocket, which is a converted Soviet ballistic missile.
Two more launches had been planned.
