<What we know is that one customer, IFN, has stated
they alone can max the system. To me that says two things: (1) only lower the price per minute as a last desperate
act (which clearly is not the case here) and (2) get the second constellation on the drawing board immediately.>
What that says to me is that talk is cheap and IFN is full of it. It also says that Globalstar management is prepared to clutch at straws. Stick their head in the sand. Fiddle while Rome burns. Just exactly when would you say that things are desperate enough to do what Globalstar service providers and Globalstar LP have already started doing?
Globalstar must think things are just a teeny bit desperate since they started with their pathetic discount which lasted until July and probably was more of a disincentive than incentive since people would wait a month or so until July to see if the offer would continue. Now they have made further cuts with the usual unimaginative 'bundled minutes' type deals. Imagination is very thin on the ground in the telephone business and I think it's because it has evolved from a government-orchestrated, if not owned, monopoly.
Globalstar has a special problem because aerospace is defence and governmental business where icky, ordinary, street-level, customers are not even dim bulbs in their consciousness.
Ken, IFN could well 'max the system'. The YPI [Your price is] scheme would also 'max the system' but it would do it with a huge fortune rolling in. FYI, YPI is the Current Price Is system, renamed for a cool acronym and a more accurate representation of the marketing plan which allows for some to have eat-all-you-like schemes while others have trading-pit pricing based on instantaneous demand.
The IFN 'max the system' data price would be a pittance. They will NOT pay voice prices for data. Yes, data carrying might be in short supply but Globalstar will NOT be a data carrier other than as an adjunct to voice because Globalstar cannot compete with Geo data systems or LEO systems designed for data applications [such as Teledesic/ICO]. Andrew Viterbi says so! I don't have to bother thinking for myself when he says that [but I do anyway and what he, W Molloy, engineer and others say makes sense].
We are getting too many promises, promises. It's like the Memorial Day Massacre - I cried wolf so often that the shorts stopped believing and are now in the trap, waiting for the REAL short squeeze which will be on Thanksgiving Day [a much more appropriate time].
The second constellation has been in design-mode for years now. But it will stay that way until the marketing people max out Constellation1 with voice and adjunct data.
Yes, more money will keep coming but shareholders will increasingly be wiped out. There is a stage at which the gap between what is owed and what is owned will be too high and the next stage will be wipeout of debt via bankruptcy. Yes, that isn't until well into 2001, but at the present rate of sales we are in bad shape.
I continue to hold the stock because it would only take a change to YPI marketing to make Globalstar the wild success it should have been from last October. I don't want to miss out on that transition. Nobody will ring a bell beforehand. They are already testing the water with their price reductions. They are not totally stupid or paralyzed and they'll gradually figure it out. They won't be ahead of the terrestrial marketers, though they could be - but unlikely since imagination is NOT a common corporate characteristic - check out Dilbert for evidence dilbert.com
In the terrestrial cellphone business, there is competition, so those with some imagination, such as Leap Wireless, get the jump on those without. Globalstar had the engineering imagination - it lacks the marketing imagination.
The system is continuing to develop, albeit excruciatingly slowly, with new gateways, roaming, distributors, licences, data systems, Wingcast and an endless panopoly of technological developments which will continue for a decade or two.
If you think lowering the price is the last desperate act, then you should be aware that Globalstar has already started the process and you must therefore conclude that Globalstar is in the last desperate stage.
Mqurice |
