Doug, looking only at " growth rates " of IP/Optical versus ATM can be totally misleading to people.
A growth rate is a mathematical derivation, not an absolute figure.
If I start owning $1 and end up with $3 my growth rate'
300%, sounds fabulous. But I am only $2 richer:
not good.
If on the other hand I start with $100 and end up with $130,
my growth rate is a much punier 33%. However I am $30 richer which is a hell of a lot richer than $2
in example above.
That I believe best describes NN's prospective 30% growth rate in the Carrier space
with 350 installed telcos and 10000 businesses.It is a small 30% growth rate out of a large
base pie because they they will be the ONLY ONE in that space.
Optical IP growth rate may be high but the installed base is not.So I don't think you are going
to see large amounts of cash come in in the immediate future.
I think a lot of telcos , NT, CSCO buy opticals QTERA, CERENT because a)are looking more into 6-10 years from now ,
b) they have the high share cash , c)are mesmerized by their financial advisers and visions of the future.
However it is difficult to say how much cash flow these new technologies will make in the next 5 years: May be
less than we think.
Meanwhile however we have a proven old technology, wireless,
whose growth rate now equals/exceeds that of optical and NN is the leader.
Here is what The Big Money is doing:Here is where the cash is ( as opposed to growth rate!!! ),
in Europe:
moneycentral.msn.com
and this is how far behind the US is:
cbs.marketwatch.com
understand better now?
:-)
TA
========================================================================
moneycentral.msn.com
Jubak's Journal
Fast and wireless -- Nirvana on the Net
Here's why I think wireless broadband technology is so powerful and why stocks like RF Micro Devices, Wind River and
Nokia are on board for blastoff.
By Jim Jubak
For something that weighs in at four ounces, wireless phones sure throw their weight around. For a warm up, these lightweights sent
the voice phone business to the canvas.
On Nov. 19, Vodafone AirTouch (VOD) offered $137 billion in stock for German wireless phone leader Mannesmann (MNNSY). Just
for reference, the stock market values all of AT&T (T) at $166 billion.
And now in the main event, wireless phones are about to do the same thing to many of the companies now in
the vaguely defined business of getting the Internet into a home or office. Not bad for a bit of plastic that many
wireless phone companies pretty much give away.
The ubiquitous wireless phone
Wireless phones are everywhere, so maybe it's hard to think of them as a disruptive development on a par
with such clearly new technologies as distributed application software (see "Stocks that'll hop to apps on tap")
or optical switching ("Stocks moving at the speed of light"). Wireless phones have been around for so long, they can't possibly be
disruptive now, the logic goes.
But that's only true if you insist on thinking that technology revolutions are caused only by technology, and ignore the power of
economics in picking winners and losers among competing technologies. I think I've saved the best for last in this four-part series on
disruptive technologies. (To learn more, see the first in the series, "Tech picks for the revolution.") The last decade has seen enormous
economic power build up behind wireless phone technology, and I think over the next decade this economic power will provide the fuel
for the next stage in the global wireless revolution -- one that's called wireless broadband.
What's the hoopla all about?
What's wireless broadband? And why do I think it's so powerful? And what stocks should you buy to play this trend? Well, that's what
this column is all about.
You've probably seen the ads on TV. This guy out to make the world safe for wireless phone customers meets in the middle of a park
with this trench-coated guy who looks like a character out of a bad "X-Files" episode. They exchange a mysterious case. Inside is...a
wireless phone that will let a user connect to the Internet.
It's all supposed to be very impressive, but frankly it's pretty hard to figure out what the hoopla is all about. So you can get a stock quote
or read a very, very short e-mail message on the tiny little screen on your wireless phone. Big deal. Who even wants to do that?
Pretty much nobody right now, it's fair to say. It's a toy, a curiosity. The truth is that wireless data transfer isn't particularly fast or reliable.
It currently runs at just 9.6 kilobits to 14.4 kilobits per second -- a whole lot slower than the 56 kilobits per second speed of that modem
hooked up to your PC at home that you complain is already too pokey. That's why the wireless companies are virtually giving the
service away. Sprint PCS, for example, will let you sign up for its wireless Internet service as a $10 a month add-on to its regular PCS
service.
But you know what? The wireless industry also isn't spending anything significant to provide this toy. Nobody's upgrading their network
to deliver stock quotes to a few thousand customers. If somebody buys a more expensive Internet phone instead of a basic model from
Motorola (MOT) or Nokia (NOK), that's gravy. The $10 a month is a little incremental revenue to pay for some of the marketing
campaigns.
Getting ready for the big rollout
All the wireless companies are doing right now is getting the market ready for the rollout of the next generation of wireless broadband
technology -- or maybe it's more accurate to say technologies. In the time-honored tradition of the wireless industry, these companies
are backing two competing standards -- CDMA and General Packet Radio Service. (Each of these "standards" has major variants,
such as AT&T's Cellular Digital Packet Data, which is related to General Packet Radio Service.) These should hit the U.S. market in
mid-2000 (in the case of General Packet Radio Service) or mid-2001 in the case of CDMA. (AT&T is offering Cellular Digital Packet
Data in the United States now.)
Both CDMA and General Packet Radio Service offer really big increases in speed over the current 9.6 kilobits-per-second rate.
According to Michael Murphy, editor of the California Technology Stock Letter, General Packet Radio Service promises 100 kilobits
per second -- about 10 times faster than the current wireless standard. The new CDMA standard will be even faster at 128 kilobits per
second. That's about twice as fast as the current 56-kilobit home PC modem.
That speed probably isn't fast enough, however. You know how long it can take to load an Internet page at home. No one will stand
around in the street waiting that long. So these new technologies play tricks to make the Internet faster. For example, Nokia and other
companies backing the General Packet Radio Service standard are also pushing a technology called wireless access protocol, or
WAP. A WAP server -- and Nokia is currently giving these away -- automatically rewrites a Web page from the HTML language into the
simpler WAP language to speed up delivery.
Wireless data speeds will continue to increase with time, but the development path for this technology is pretty clear. The next
generation will be faster than the standard PC modem operating over standard copper wires, and about as fast as ISDN. (Remember
that technology?) It will still lag the 640 kilobit speed of DSL, but even at 100 to 128 kilobits, wireless is in the game.
Four ways that the game will change
And in fact I think wireless data at these speeds has the power to change the game in four ways.
1.First, it accelerates the rate at which U.S. consumers, following in the wake of their European counterparts, go off the wire. More
and more wireless users around the world are opting for wireless as their only phones. But a consumer who went off the wire for
voice, still had to stay on some wire (or cable) for data and the Internet. Not any more.
2.Second, wireless broadband will make the market for Internet appliances explode. Any appliance with a radio frequency chip set
and a wireless modem can hook up to the Internet. Nothing has to hook up to a phone jack, which means you can put an
appliance anywhere in a house, a car, or in a bag, backpack or pocket. (For more on the implications of a world of wireless
Internet appliances, see my May 21 column "Who wins when the world goes digital?")
3.Third, wireless broadband will heat up the struggling market for home networks. Internet appliances all need to be coordinated --
can't have personal calendars or stock portfolios out of sync. But the current solutions for updating all the devices an individual
uses are awkward. Infrared communication requires a clear line of sight. Physical docking requires, well, physical docking of
each device. But the wireless home network would consist of just a hub, connected to the Internet, that coordinates and swaps
data between all the devices you own using radio frequencies and software. The consumer at home would have all the
advantages of a workplace Ethernet -- including Ethernet speed -- without the wires. Want to see what that device would look
like? Check out Apple's AirPort wireless base station from the link on the left.
4.The consumer market for wireless broadband will give a huge push to the business market. As wireless devices provide central
access for data, the logic of building wireless corporate networks increases. At the least, workers who use wireless devices will
want to be able to access the corporate network, which may, in part, go wireless even inside the office. And, going even further,
some corporations will opt for going wireless with their whole network for data access and transmission.
What stocks to buy?
So what stocks do you buy to take advantage of these changes in the rules?
This isn't the first time I've written about this topic, so I've already got a couple of good plays on broadband wireless in Jubak's Picks.
As I wrote on May 21, when I added Wind River Systems (WIND) to Jubak's Picks, "the company will be a major beneficiary of the
rapid growth in the market for specialized appliances that can communicate over the Internet." The most recent development on that
front was the Nov. 18 announcement that Wind River, Lucent Technologies (LU) and privately held Trillium Digital Systems would
collaborate on a hardware and software product for Internet telephones. My current target price for Wind River is $45 a share by April
2000.
The other current Jubak's Pick that fits the bill here is Nokia, one of the leading members of the General Packet Radio Services
consortium and a pioneer in wireless phone Internet access. The stock has run up mightily recently, but I think this is a long-term
keeper. I'm raising my target price on the stock to $180 by July 2000.
Some of the other ways to play this trend are pretty obvious. Qualcomm (QCOM) is the leader of the CDMA camp. Metricom (MCOM)
is building a 128 kilobit-per-second proprietary network in cities around the world. The first dozen or so cities are set to go online this
summer. WinStar Communications (WCII) and Teligent (TGNT) are the leaders in wireless broadband for corporate customers. RF
Micro Devices (RFMD) makes chips that mix, modulate, amplify and transmit radio signals for wireless local loops, wireless phones
and wireless local-area networks. RF Micro Devices is probably the single best stock to buy to invest in this trend (if you already own
Nokia and Wind River). And I'm adding it back to Jubak's Picks with a target price of $104 for May 2000.
Some less well-known stocks are worth your research time too, I believe. Anadigics (ANAD) and TriQuint Semiconductor (TQNT)
compete with RF Micro Devices to supply chips to wireless phone makers. Cisco Systems (CSCO) recently bought Aironet Wireless
Communications, a maker of wireless local-area networks. Other companies in that market include Proxim (PROX) and Performance
Technologies (PTIX). PMC-Sierra (PMCS) makes chips for high-speed, broadband networks, including local-area and wide-area
networks. The stock is interesting in itself, but the company also owns a substantial piece of Sierra Wireless (CA:SW), a Canadian
maker of wireless modems that is a major supplier to Metricom. Other communications-chip companies worth exploring for their
exposure to the modem and area network business are Applied Micro Circuits (AMCC) and Conexant Systems (CNXT).
I'm sure that doesn't exhaust the list of possible suspects, either. I've just scratched the surface. For example, I haven't found a good
play on BlueTooth, the coming standard for radio chips that let devices communicate with each other. To add your suggestions to the
list of stocks that will profit from this and my other two disruptive technologies -- optical switching and "apps on tap" -- go to my
community, Market Talk with Jim Jubak, and find the running set of posts called "Add your tech picks for the next revolution." I'll be
reporting the results in early December.
Recommendations
Research Wizard
Add RF Micro Devices (RFMD)
RF Micro Devices (RFMD) is probably the best stock to buy to invest in the explosion of wireless communications, including wireless
broadband -- assuming you, like Jubak's Picks, already include Nokia (NOK) and Wind River Systems (WIND) in your portfolio. So I'm
adding RF Micro Devices, a maker of chips that mix, modulate, amplify and transmit radio signals for wireless local loops, wireless
phones and wireless local area networks to my picks with a target price of $104 for May 2000. The stock looks like it's in the process
of consolidating after its run up to $80 and I expect that the addition of new customers such as Motorola (MOT) and Qualcomm
(QCOM) and the continued strength of its big business with Nokia, will produce revenue and earnings growth that will push the stock up
strongly over the next six months or more.
Recommendations
Research Wizard
Recommendations
Research Wizard
Drop ADC Telecommunications (ADCT)
ADC Telecommunications (ADCT) moved decisively above my $55 target price for June 2000 on Nov. 29. I'm selling the stock into
strength to take advantage of any rally into the company's Dec. 1 earnings announcement. This stock became part of Jubak's Picks by
accident when the company purchased Saville Systems, which was already in the portfolio, on Oct. 8. It's been a very happy accident,
producing a gain of 35% since then and amply rewarding my decision to stick with the acquiring company. (Full disclosure: I will be
selling my shares of ADC Telecommunications the customary three days after this column is posted.)
Adjust price target for Nokia (NOK)
As of Nov. 30, I'm raising my target price for Nokia (NOK) to $180 a share by June 2000 from the previous target of $120 by February
2000. Nokia is on track to a record December quarter and the company is set to deliver a promising array of new products in 2000.
This remains a core technology holding for Jubak's Picks. (Full disclosure: I own shares of Nokia.)
-----------------------------------------------------------------------------------------------------------------------------------------------------------
cbs.marketwatch.com
A U.S. view on European
wireless fray
U.S. carriers years behind in global wireless
business
By Jeffry Bartash, CBS
MarketWatch
Last Update: 3:34 PM ET Nov 19,
1999
NewsWatch
WASHINGTON (CBS.MW) -- U.K.-based Vodafone's
hostile attempt to acquire Germany's Mannesmann won't
have immediate repercussions in the U.S., but if
Vodafone wins the battle, it could force American
carriers to accelerate plans to expand wireless phone
service overseas.
For the past few years, American carriers have been
focused almost exclusively on creating wireless
networks covering the 48 contiguous states.
Even now, behemoths such as Sprint (FON: news, msgs)
and AT&T (T: news, msgs), while touting national
coverage, still have gaps in their networks. And MCI
WorldCom (WCOM: news, msgs) has no network at all,
which is why it's agreed to buy Sprint.
The push to create U.S. wireless networks is even
greater among the large local phone carriers, which are
further behind in the game. BellSouth (BLS: news,
msgs) and SBC Communications (SBC: news, msgs),
among others, still lack a national presence.
"They have to worry about filling in major holes here,"
said Adam Zawel, a wireless analyst at The Yankee
Group.
Even the one U.S. company that would seemingly appear
to benefit from a Vodafone victory, joint venture partner
Bell Atlantic (BEL: news, msgs), would not harvest the
fruits for several years at least.
The reason: Bell Atlantic and AirTouch, the Vodafone
unit with which the Bell has formed a joint venture to
blanket the U.S., use a different wireless transmission
standard than the European carriers.
As a result, Bell Atlantic wouldn't be able to entice
prospective customers with a "global" wireless service
that evades cross-border roaming charges. And it'll be
several years at least before a unified global
transmission standard takes hold and wireless users will
be able to make calls from anywhere in the world.
Nonetheless, if Vodafone manages to
hunt down Mannesmann (see main
story), it'll become the world's largest
wireless carrier by far. That could put
more pressure on American operators
to look beyond the U.S.
To some extent, they are already doing
that. AT&T has an alliance with
British Telecommunications (BTY:
news, msgs) and is likely to make its
international push in concert with the
U.K.-based telecommunications giant.
MCI WorldCom and Sprint, both
internationally oriented carriers, will
also seek overseas opportunities,
though that'll probably have to wait
until the carriers see if they can muster
regulatory support for their pending
$135 billion merger. Policymakers in
Washington are putting up stiff
resistance.
"MCI Worldcom and Sprint have their
hands full with their own merger," Drake Johnstone of
Davenport & Co. noted. He estimates it could take a
year or more for the carriers to win approval.
Among the local phone giants, BellSouth has made the
biggest waves, though it's concentrating mostly on Latin
America.
Vodafone's combination with Mannesmann, while no
sure thing, would increase the pressure. "I think it will
encourage U.S. supercarriers to consider international
footprints more quickly," Zawel summed up. |
