Okay, sorry again! You are quite right that Globalstar or the Service Providers won't dictate the retail prices set by distributors. I meant they set the prices they charge to the distributors. That leaves a narrow range in which the distributors can move. Distributors can't do what needs doing, which is reduce the minute prices to the level which will see humans use the minutes rather than them going to waste in space.
For an allegedly free-market county [belied by the restrictive trade practises of the USA in regard to sheep trade], the USA and companies which live there are decidely un-freemarket in their practises.
It is beyond belief [almost] that Globalstar lumbered into gear at the high end of minute pricing and is belatedly trying to stir some interest by giving some price cuts.
That gives the impression of desperation and failure. Customers will be reluctant to buy a handset when they will assume Globalstar, like Iridium, will fail. They aren't interested in bent pipes and stuff. They just see a failing satellite system. Hence the share price.
If Globalstar had started with free minutes and let the subscribers set the price by bidding up the price of available handsets, then the system would have been, last December, off to a roaring start. Minute prices would by now have had to be increased to slow demand as the supply of handsets would have been unable to keep up.
This isn't back-seat driving. I'm in the driver's seat in that I sell the stock if I want to and buy it if I want to. That process, multiplied by all the other shareholders, drives action by management who have to react to a [currently] miserable share price. There is also actual voting at shareholder meetings. Our discussions and shared information here help determine the share price as we all react to ideas and information.
When management tries to raise funds, the lenders or investors take a look at the share price on the market. That leads to management dilution and loss of control if things get too bad.
There are many hands on the steering wheel of publicly listed companies!
In a way, it doesn't matter to me that Globalstar has mucked things up, since the shares I can buy now are so cheap that the return over the next 10 years will be much the same as if they had done things right and the share price was now $45. A third the price is not a bad deal! But then again, they can still muck things up more.
George Gilder says the intelligence needs to be at the periphery, which means the gateways and subscribers set the prices. The Kremlin central 5 year planning hasn't worked very well so far. This is an extraordinarily difficult concept for people to grasp, but it's worth the effort. There will be a lot more of it around. [I should add I'm kidding, but I genuinely am surprised that Globalstar didn't 'get it' and few people seem to - maybe it really is tough to understand how it would work].
Maurice |
