OT OT About MCOM and price/cost/value of service.
What is the cost to MCOM of providing their ricochet service?
From their balance sheet it seems they have 75M in long term debt,
and 250M in accumulated deficits. And how many subscribers are
using the service? Ah, from their web site 1998 26K subscribers,
so ~3K of debt service per subscriber. And 30K of losses in acquiring
the subscriber.
It seems that MCOM is providing a loss leader service to get subscribers.
This has worked for internut companies because they can get equity
funding and marginal cost per user is low. This is simply not the
case for MCOM.
It is a meter reading system. It can handle 100 bits per month per
household. IS-95 is a brilliant bandwidth efficient scheme by
the best communication engineers on earth.
QCOM makes profits, that is why we buy their stock. MCOM generates
huge losses, that is why they are taking on more and more debt.
QCOM has a large number of profitable partners as well, Kyocera,
Sprint, SAWS, ... What other company is in MCOM's value chain?
The CDMA system can start with very few base stations, acquire
customers, earn profits, then infill with more base stations as
needed. MCOM's ISM system needs a huge number of micro base stations
installed in an area, using debt, then a small number of users
choose its data service, not enough to cover debts. Losses continue
to mount, more debt is piled on.
HDR's pricing is indeed to be determined. Whatever it takes to get
the system filled. Please study airfares for an example.
MCOM is toast. |
