Loral Space and Communications shareholders have seen better days.

Behind their woes is Loral’s stake in Globalstar, the satellite telephone company which has suffered from slower-than-expected sales of its service and the prospect of price competition.

Since February, New York-based Loral has seen its stock tumble from a high of $22 a share to a low of about $10 a share after a flurry of Globalstar stock downgrades were launched by industry analysts.

"It’s definitely a drag on [Loral stock]," said Cyrus Boga, an analyst with Merrill Lynch in New York. "When a company pledges some of its secure assets into a more risky pool, it’s always a drag."

"Loral’s exposure on Globalstar’s debt load makes them really exposed," said Marco Caceres, an analyst with the Teal Group in Fairfax, Virginia.

There is no question that the downgrades of Globalstar stock have put a dent in Loral’s stock price, said Loral spokesman Mac Jeffery. "We own about a 40 percent stake in Globalstar and it’s always going to have an effect," he said.

But, Jeffery pointed out that the rest of Loral’s businesses are doing very well. "I think a lot of the analysts have wildly overreacted," he said.

And, while Jeffery admits that using Loral’s two satellites as collateral for a Globalstar loan may have "spooked" investors, "we are not going to let our satellites fall if a loan fails."

Merrill Lynch downgraded both Loral and Globalstar stock earlier this month. Since then, several other brokerage houses have followed.

This past week, ING Barings analyst Robert Kaimowitz lowered his rating on Globalstar stock to "hold" from "strong buy."

"We believe there is a potential for significant downside from even current levels as performance results for the first quarter begin to disseminate," he said in his research report.

In addition to its inability to ramp up subscribers for its global wireless service, the "Iridium effect" seems to have infected Globalstar’s outlook.

Iridium is the Washington, D.C.-based satellite telecommunications company that met its demise this month as efforts to keep its 66-satellite constellation afloat failed. It had hoped for an 11^th-hour rescue by a qualified investor, but no substantial bid was received by the company’s deadline.

Motorola, which has lost nearly $1 billion in the operation and maintenance of the $5 billion, 10-year-old Iridium constellation, said it will yank the Volkswagen-size satellites from orbit and send them into the Pacific Ocean.

"Motorola took a bath and investors see that what happened to Motorola could happen to Globalstar," Caceres said. "And any connection between Loral and Globalstar is going to be looked at closely."

Meanwhile, Globalstar has been scrambling to keep above the fray of bad publicity.

A few weeks ago, the company announced that some of its distributors would give rebates of up to $495 toward a new Globalstar phone for Iridium users who trade in their handsets.

But, some analysts seem to think that the amount of the rebate is negligible because of the rapid evolution of cell phones.

"It’s not going to make a difference," Teal Group’s Caceres said. "What are the obvious advantages of satellite phones anyway when you can get a cell phone handset for free?"