To all - "must read" post from Allan Reagan regarding Globalstar.
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SI: StockTalk: Communications: Globalstar Telecommunications Limited GSTRF
To: Geoff Goodfellow who wrote (11142)
From: A.L. Reagan
Mar 24, 2000 6:39 PM
Respond to Post # 11185 of 11195
Historical Allegory - Perspective on Bashing. Hope y'all enjoy!
NEW YORK (Dow Jones) - MARCH 24, 1900 - DURYEA DEMISE CASTS PALL ON FORD, OLDS
AUTOMOTIVE EFFORTS
The Duryea Motor Car Company ceased all production and marketing efforts late last week after millionaire tire pioneer
Monroe Sieberling withdrew support for an 11th hour rescue plan.
Its costly collapse has analysts wondering if its rivals may also be in danger of internally combusting.
Duryea, which was first to market in the U.S. with a production automobile in 1897, was never successful in signing up
adequate numbers of drivers to achieve break-even. In addition, due to frequent mechanical breakdowns, miles of usage
(MOU's) were far below analyst expectations.
The Duryea featured three wheels, a three-cylinder internal combustion engine, and a tiller steering device, and was
criticized for its clunkiness, high cost, and propensity for getting stuck in the mud.
"The whole premise of internal combustion engines was based on Jules Verne fantasies," said Herschel Dumbstruck,
president of Herschel Dumbstruck & Associates, a transportation market analysis firm.
"I doubt that any kind of market will ever exist for automobiles. When these horseless carriages were first conceived
back in the 80's, few anticipated the explosive growth of passenger rail during the 90's and into this century. Nowadays,
passenger trains link the downtowns of every major metropolitan area. Anywhere any one would want to go is already
well-served by terrestrial rail or steamship, and the cost of a rail or steerage ticket is far below the cost per MOU of
operating an automobile," Dumbstruck stated.
"Way back in 1890, I advised my client, American Track & Train, to avoid investing in Duryea because its business plan
was flawed. The fact that Duryea has now collapsed shows how really, really smart I am about this entire area,"
Dumbstruck added.
Duryea's demise threatens upstart carmakers Henry Ford and Ransom E. Olds, Wall Street sources said. "This Ford
fellow came to us for financing," J.P. Morgan of J.P. Morgan & Co. stated. "He just started rolling out a carriage called
the Model A and wants to build a next generation something called the Model T."
"These horseless carriages will never catch on. The Duryea was far too expensive for ordinary people, and why would
wealthy people want to go through the hassle of operating one of these contraptions? Personally, when I need to leave
Wall Street, I board my private railcar, which takes me directly to Saratoga. There I'm met by a team of thoroughbred
horses hitched to my Phaeton, which takes me straight to the track," Morgan added.
Early sales of the Model A appear to be slow. "Our research team contacted a number of buggy dealers and horse
traders," said analyst Tom Whatt, "and of the few that had even seen the Model A, none reported robust driver uptake.
Apparently there have been delays in getting the cars shipped from Michigan, and some horse traders appeared unsure
how to market the product. Based on this, we project far fewer drivers in Model A's than originally forecast for this year.
I desperately hope this leads to massive liquidity problems, so I can finally be right after promoting Duryea for years,"
Whatt stated.
"Based on what happened to Duryea, we are advising all our clients to immediately sell their shares in Ford Motor
Company, and accumulate shares in the New York Central," stated money manager Gregg Slymowitz of Distrust Capital.
Distrust has a large short position in the automaker.
At less than half the cost, the Ford motor car is promoted as having a number of improvements over the Duryea, but has
been plagued with missteps. An early Zenit four-cylinder engine exploded during machine tooling. Critical components
required from a Swedish manufacturer were not shipped on time. Although a steering wheel was promised, the initial
models still feature tillers. Additionally, Ford's models are not compatible with the established European metric standard
promoted by rivals Daimler and Benz.
CEO Henry Ford has stated that the Model A and later Model T are not contemplated to replace railroads, but to provide
transportation to the 90% of the earth's area not served by rail or steamship. Ford claims that as production economies
are achieved there will be significant reductions in both the price of the equipment, as well as per mile costs, and that
there is a worldwide market for automobiles.
"Understanding the market for an automobile is a lot like understanding gravity" Ford stated. "You know it is out there,
but this concept of motorized self-drive transportation is difficult to get people to grasp."
Skeptics abound. "There is no way people in outlying areas will ever be able to afford such a thing as an automobile. Plus,
they live in villages or on farms and have little need to travel beyond a day's horse ride. Wherever there are concentrations
of people with disposable incomes, there is rail or steamship service, and its cost has been steadily decreasing,"
Dumbstruck insisted.
After self-styled transportation visionary George Gilded spoke highly of Ford's technology in a December, 1899 Gilded
Age newsletter, as well in his annual Transporcosm conference, Ford shares ran up to over $50.
Since it became clear that Duryea would internally combust, Ford shares have lost over two-thirds their value. In late
trading Friday on the curb market, shares were sharply lower, losing 1-15/16 to close at 15-7/16ths, just above their
1899-1900 52-week low.
Olds is working in Lansing, Michigan on a more advanced model that features eight cylinders and in addition to passenger
transport, also enables luggage packets. Ford's Model A only provides 9.6 cu. feet of luggage packet capability, whereas
the Oldsmobile, expected to be available in about two years, offers an expanded 384 cu. ft. for packet transport. Ford's
next generation Model T, which will feature expanded packet functionality in addition to passenger transport, won't be
available until 1906.
Carrying luggage packets, not people, may be the wisest move yet, analysts say.
- Allan Reagan |
