OK2, making money in the stockmarket is a matter of predicting the future before others have any idea what's going on.
The present stock price of Globalstar is therefore irrelevant. I need to know what the stock price will do and how much profit there will be over the next 5 and 10 years.
I therefore need to judge the current position and declared plans of the company. It is not too early to conclude that they are repeating the mistakes of Iridium. They have started selling, and rightly so, even though they have nothing to sell. Valueman has been told prices and schedules. That is selling. Direct selling. It is establishing in the minds of prospective customers what Globalstar is all about.
So far, it is a big ugly phone, which gets flat batteries, you can't use it all over the world contrary to the impression given by the word "Globalstar" and advertisements and media discussions and Iridium's advertising. It costs heaps [$1500] and the minutes are off the planet at $2. Use it outside only [in a car is okay if you have a car kit installed] and not under trees - you need a BIG sky.
The impression the customers get now will last until something knocks them onto a different track and they will be resistant to going onto a new track. That is inherent human nature. Stay on track!
That's why so many companies go bust and determinedly stay with crazy ideas - they are determined to stay on track, even when things become absurdly obvious. Look at Ericy and CDMA as just one example. Look at Iridium as another. Of course, it is also true that successful people are determined to stay on track. Those who wobble all over the place don't do well either.
An uptrend in the Globalstar stock price does not get customers. It is just a vote by shareholders as to how well things are going to go. People vote for all sorts of stupid things.
We are unhappy because we think that customers are not going to come running. They are going to yawn. [Generally - of course some will run. At least 31,415 will come running, slowly. We need 100 times that many to start to smile.
While Iridium is no long term competitive threat, since it has so few minutes to sell and is in 'rescue a bit of flotsam' mode, there is, as already pointed out, a chance to get even those few customers Iridium might otherwise get, denying Iridium sufficient cash flow to keep operating.
I disagree with the cheap handsets idea. The handsets need to go to the people who will use a lot of minutes. They will be happy to pay the higher prices for the handsets. Handsets and minutes can't both be cheap because there will be a limited supply of handsets, until Q! Ericy and Telital see that there is going to be serious demand and they build production lines. What we can sell cheap is minutes, which we have in huge overabundance with a zero marginal cost of production for the next minute sold. Stack em high and sell em cheap is how to move the minutes. Use the WalMart discount method - they sell a lot of stuff, which has a marginal cost.
It is nice to see a rising stock price, but Iridium rose all the way to $72. That must have been nice at the time. Reality is what matters.
Maurice |
