The company reported a net loss of 216 million dollars, or 98 cents per share, for the three months ending March 31.

Globalstar, a worldwide consortium headed by US-based Loral Space and Communications, said the revenues of 609,000 dollars reflect the fact that service has only just begun in several countries and has not yet begun in others.

"We experienced start-up challenges normal for any new service introduction," said Bernard Schwartz, Globalstar's chairman and chief executive officer.

"But these issues have been addressed and solved, including the establishment of a consistent telephone production schedule and implementation of international roaming agreements."

Globalstar's aim is to offer global wireless telephone service to virtually all populated areas of the world through a network of 48 low-orbiting satellites.

The 3.3-billion-dollar project is backed by companies including Italy's Alenia, China Telecom, DaimlerChrysler Aerospace, Finland's Elsacom, South Korea's Hyundai, France Telecom, Alcatel and Vodafone AirTouch.

But some observers are skeptical, following the spectacular failure of the five-billion-dollar, 66-satellite Iridium project and the reorganization of another satellite group, ICO Global Communications.

Globalstar spokesman Mac Jeffery acknowledged that the company must renew a 250-million-dollar line of credit by the end of September without an increase in revenues to avoid a cash crunch.

"We are just getting started," he said. "What is encouraging is the increasing acceptance of the system."

But others question whether customers will pay 1,000 dollars or more for the telephones needed for the system and the per-minute charges of one dollar or more. The same problems plagued Iridium, which ended service in March.

"Globalstar is different (from Iridium), it's doing worse," said Salomon Smith Barney analyst John Coates.

"I've been a long-term advocate of mobile satellite services. The question is the how big is the market and how long will it take for Globalstar to find the market. Right now Globalstar is showing us it has not found the market."

Salomon Smith Barney downgraded the stock to "neutral" on Monday following the report, Coates said.

Earlier this year, CIBC World Markets and Merrill Lynch downgraded Globalstar, citing uncertainty about the viability of the global mobile satellite telephony market.

The online newsletter TheStreet.com reported last week that Lockheed Martin may back away from guaranteeing the 250 million dollar line of credit, and that billionaire George Soros had sold his 5.3 percent stake in the company.

But Jeffery said the company is unlike Iridium and sees a bright future.

"For one, we're a lot cheaper," he said. "Iridium was anywhere from three to five times more expensive."

Jeffery said Gobalstar has not been plagued by the technical problems that faced Iridium. Moreover, he said, the group is working with major wireless companies around the world for marketing and customer support.

Globalstar is aimed at business travelers who are often out of range of normal cellular or wireless service, as well as industries that operate in remote areas, such as mining or oil exploration.

Additionally, it seeks a niche in sparsely populated areas that do not have wireless coverage, including large areas of Canada, Australia and China.

Unlike Iridium, which made a big worldwide launch on a single day, Globalstar has gradually introduced service in various countries. It is now available in 38 countries, and is expected to be in 80 by the end of the year.

Globalstar said it has shipped 67,000 phones to date and has orders for more than 300,000. But it must regain confidence to keep its investors on board.

"The company is going to need to raise money by the end of the year, and it's unclear how they are going to do this," said Coates.

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