And here's a response from an educated short:
robtest: debating the IBD article
by: reggae_spice (23/M/jm) 16756 of 16769
I guess the nice thing about a market is that two people can read the same set of tea leaves and see different things.
For my part I read the article, most especially the part which says
"Going forward, we'll be able to add further increases in speed on top of what we have. We understand capacity and we've engineered a network that delivers speed with lots of users. That's different than quoted speeds for unloaded systems with a small number of users. "
And I did NOT see from that , that they would be able to offer speeds in excess of 128k. What I DID read from that as an Engineer who works with systems, is that they intend to do load balancing across the WAP's to give increased bandwith per user in order to scale the number of users that can be on a given WAP, without speed deficiency.
To put it another way, just like cable, MCOM's architecture is a shared designed, the more people using the service, the slower the service will be. What the article says is that they have unstated ways to preserve access times/keep network latency low, as user load decreases.
Personally I find that concept questionable, but I won't quibble with; I am quibbling however with the idea that a user, even if he is the only one on the Ricochet network, will be able to exceed 128k (or around 14kbs throughput).
Additional information I found fascinating is this statement which read "With such formidable backing, Metricom plans to quickly expand to 50 markets by mid-2001"
Hrmmmm....how many of you longs want to say mis-print? In any case the most up to date information from this article has ricochet deployment starting in mid-2000, and 50 markets by 2001. This represents a 'new' 6mth increase to add 6 new markets, as the original figure was 44 markets by the end of 2000, with the roll starting in mid 2000.
Complacency...its a killer.
Additional items of note:
The WCOM investment of 300 million ($10 buxs a share), gives them a 38% stake in the company, when the deal closes in September. Unless of course MCOM closes below 10 in september,
MCI basically is printing themselves money in a no-lose proposition. (Usually when companies take a stake in another company, they pay a premium to the share price)
Essentially WCOM in september is probably going to get their shares for 'free'. The dilutive impact of this should be clear to all investors both long and short.
Finally I appreciated this paragraph
"Through our network, they're accessing information in databases to help them do their jobs. They may be accessing data on corporate local area networks. They're also accessing the public Internet. It may be a lawyer, or a real estate agent at a client's location, who wants to look up information. "
which once again illustrated to me that they are going after the business market, and NOT the consumer market. The business market of course would be easier to grow, but is much smaller than the consumer market.
In other news, AOL with its high P/E, and rather high P/S ratio broke a key support level today, along with EBAY.
Reggae
FD: short on mcom
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