<...Globalstar's investors have clearly been disappointed by the company's dismal earnings and outlook. Indeed the company has built a portfolio of valuable assets with its fleet of 48 operating satellites and numerous gateways. However, without enough customers utilizing the birds in the sky for the services that Globalstar is offering, the fleet and the network cannot realize their value. The main concerns have been, and remain, whether or not there is a market out there for Globalstar's mobile satellite phone products and services and if Globalstar can successfully attract customers to subscribe to its services. Unfortunately, Globalstar is quickly running out of the time it needs to prove its belief that the market exists and it can capture it. ...>
It's too nice here to sit inside, so I'll answer your 'ZERO VALUE IN BK' theories later PCSTEL. Meanwhile, hello world! Yes, 2001 arrived in NZ as expected. Skies are still blue, leaves still green.
But this article needs some pedantic attention. They have got it back to front. The same as Globalstar and their service providers have. They seem to think there is some intrinsic value to Globalstar because it cost a lot of money to build. It has zero value, even if not in bankruptcy, other than the value which subscribers put on it.
One thing Irwin Jacobs is always quick on and it is far more than just business school cliche which drives it, is customer value. I believe he is an engineer who understands causal relationships, not just as a kind of 'oh yes, that's probably true' theoretical idea, but intrinsically. He is used to figuring out what makes things tick.
He is always keen to discuss technology but immediately relates that to end-users! Yes, we all know that keeping customers top of mind and having customer focus and blah, blah, blah has been discovered by MBAs around the world. But it's dinkum empathy and consumer surplus and reflected glow which is what it's really about. Too many 'customer focus' managers think it's meant to be the sort of focus which a farmer has on his sheep. The farmer cares about his sheep only to the extent that they grow quickly and he can fleece them in quantity.
The customer focus which I mean would be in the nature of a friendship, where one is not concerned with fleecing one's buddies but with reciprocity. Similarly with happy families, one is more interested in the reciprocal love which exists rather than the fleecing one can do. Which is not to say that the black sheep of the family should be allowed free rein to fleece the family finances. It's the state of harmonious reciprocity which matters.
With that little preamble, I shall make my points.
The value of Globalstar is in the value for money which subscribers see. If they see big value for money, they'll buy heaps and if they see none, they'll buy none. Somewhere between is the happy state where they see good value and we charge enough to make big profits. We seek the state of maximum human happiness - good old utilitarianism. If we are too greedy, subscribers don't buy.
It is silly for Marc Crossman and Aileen Chen to comment that without customers the value of Globalstar won't be recognized. Well duh! What a revelation. What they reveal is the real problem which is that accountants think that the constellation cost a certain amount, so we have to charge a certain amount to make a profit. They have got it back to front. They are staring at their navel. They have to stare at the customers.
It doesn't matter whether the constellation cost us $1 to build or $100 billion. The value which subscribers see is the function of the system less how much they have to pay us. The extent of that value will determine how quickly the subscribers buy [influenced of course by sales efforts, points of presence and all that marketing jazz].
Marc and Aileen are confusing value and cost. Cost is what it cost us to build. Cost is what the subscribers see when they get their bill. Value is what the customers get when they use the system. That is the only value the system has [other than the intangibles such as people enjoying watching satellites float over the sky - but we are interested in financial value, not that sort of stuff]. The system cost is NOT the system value. The value to shareholders is what is what is left over when we have paid our costs out of what subscribers agree to give us. Until we give value to subscribers, we get none for ourselves.
Marc and Aileen's observation that we need customers is sort of like observing that a car without wheels won't be going anywhere. It's not really a useful observation as I'm sure even the service providers understand that we do actually need customers.
Then Marc and Aileen repeat the same comment with the idea that the main problem is whether there is a market out there. Well duh again! It's been a year since we knew that the technical side of it was fine and the only significant issue is the price at which the constellation will fill and the hunt for the sweet spot has been on. Our hunters are very slow-footed! They should NOT try to catch gazelle by hand.
The main problem Marc and Aileen, is not whether there is a market out there. There is a vast, unsatisfied market! There are billions of people who would like to have a Globalstar phone. The question is at what price. The big question which we have not started to answer is "How big is the consumer surplus which Globalstar offers?"
My answer is that at 10c a minute for calls anywhere to anywhere, anytime, we could easily sell 100 billion minutes a year if the handsets were $100. That's $10 billion a year income. Even with the first constellation, we have 10 billion minutes to offer. The value of those minutes will be decided by subscribers, not by Vodafone, or Globalstar or anyone else. Not governments, dictators or QUALCOMM or George W Bush. Though George has so far managed to dramatically reduce the value of the USA and hence the value of Globalstar by the mere threat of taking over the presidency - since becoming president-elect, the markets have taken fright. Governments and others can reduce the value of something to subscribers, but they don't decide the value to the subscribers. Globalstar has reduced the value to the subscribers with no help, but George W is happy to help. Nasdaq down another 7% today to 2290 and 2273 at the low.
What will make Globalstar tick is value to customers.
We need to quickly find out just what these minutes are worth which will determine how many more constellations we need to launch and what vast wealth we can create for subscribers and ourselves.
The sooner we fill the first system, the sooner we find the true value of Globalstar and the sooner we make a bit stack of profits. The way to do that is to make it cheap so customers come crowding. Year 1 was a Y2K fizzer. We had a Zenit failure and we had a marketing failure. So we are two years behind schedule. But that's not the end of the world. Meanwhile, there are a LOT more gateways than this time a year ago. The satellites are all in position - they weren't this time last year. There are roaming agreements, which didn't exist a year ago. Ericsson even has handsets for sale, which they didn't a year ago. Progress has been good. The coverage maps are still inconsistent - which ones should we believe? But at least the coverage is inexorably spreading.
Mqurice
PS: Bill Clinton should simply refuse to hand over the Presidency to a fake interloper who did NOT win the election. Bill should require another election or simply require an official recount in Florida of all the votes. Bill should remain in office until the democratic process is completed without an absurd bunch of politically-motivated political appointees in the Supreme Court or Florida Court arbitrarily cutting off the democratic process. If it takes longer, too bad. The important issue is the total votes, not some timetable.
Actually, Bill Clinton should require a referendum on the arbitrary law which says he is excluded from being President. It is unconstitutional and absurd for him to be denied full freedom as a citizen of the USA to stand for the presidency if he wishes.
As Commander in Chief, Bill Clinton ought to ensure the voting majority have their power to determine the political process recognized.
It would also be a LOT of fun and give news media LOTS of big headlines and commentators lots of comment to make. Another 4 years of Bill Clinton would be a popular choice compared with George or Al. The stockmarkets would zooommm upwards. |
