Loral Space & Communications
, a satellite maker, no longer has to provide funding to
this year, but the company will continue to support its joint participation in service provider franchises in Canada, Brazil, Mexico and Russia.
Still, Loral plans to write down its Globalstar investment, including common and preferred equity and debt, and will incur an unspecified charge in the fourth quarter.
The announcement came after Globalstar said it would
indefinitely suspend the principal and interest payments on its debt, as well as dividends on its preferred stock, in order to maintain available funding for its marketing and service activities.
Loral, one of the founders of Globalstar, a satellite-based phone service, said it ended 2000 with cash and available credit in excess of $440 million. Although Globalstar's actions will reduce Loral's 2001 cash receipts from the satellite venture by $140 million, the company will continue its current investment programs, including funding the construction of three satellites set to be launched in 2002.
At the end of 2000, Loral's investment in connection with Globalstar totaled $1.3 billion, which included 39% of Globalstar's equity and 27% of its debt.
, another Globalstar founding partner, expects a "small negative impact to operating earnings" in the first fiscal quarter as a result of Globalstar's moves.
Despite the costs, Qualcomm is still comfortable with Wall Street's earnings expectations of 28 cents a share for the period. The company earned 25 cents in the year-ago quarter. The digital wireless products and services company said it had about $610 million in assets related to its business with Globalstar.
Shares of Loral recently gained 6 cents, or 1.2%, to $5.13 in
New York Stock Exchange
composite trading, while Qualcomm lost $1.25, or 1.7%, to $70.50 in