Maybe qwik will explain it to you. I think he may have read it when he wasn't ignoring pink rhinos...
I did indeed read that interview, twister. I try to take seriously and learn from all reasonable points of view, and yours in particular.
I'll explain what I came away with from that interview, at least the part I'd feel safe posting in a public forum, but I doubt you'll enjoy the explanation.
To put far-from-too-fine-a-point on it, Mr. Zell was just doing his job. He is the Chairman of the National Association of REIT's. He owns and runs REITs and was selling REITs just like McNealy sells Sun when he's interviewed (as both men should).
It's true that Zell "bears the scars", as Barron's put it, of boom and bust cycles and therefore may have some been-there-done-that wisdom to apply to the inutz bubble. But the facts that jumped out at me from that interview were these:
1. To quote Barron's interviewer, REIT stocks "have been crummy performers over the past two years".
2. To quote Barron's caption, "The share prices of two real-estate investment trusts controlled by investor Sam Zell have suffered with those of other REITs. But Zell is bullish on the group." If he wasn't bullish on the group, it would be a little like hearing a scream from the cockpit<g>.
3. To quote Zell, "The retail REIT's suffer from a big cloud, which is called e-commerce. I don't think e-commerce is going to put the retail side out of business at all."
4. Once we get past retail real estate, to quote Barron's interviewer, "You have been opportunistically lightening up on some of your prime office properties," an assertion that Zell dances around a little. Somewhere in the interview, as part of the general denigration of .com stocks, Zell denies that technology developments in general and telecommuting in particular represent any threat to the office real estate market, or at least the part of it targeted by his trusts.
5. Zell has such a profound understanding of technology that he invested in pay phones. Here is the relevant excerpt:
Q: Like any investor, you've had some turkeys. What current investment is giving you the most problems?
A: Well, in Davel Communications, I've managed to turn a $36 million 14% stake into just $6 million of current value. That obviously has been a financial disaster to date.
Q: What happened?
A: I was attracted to the company because it is the largest independent pay-telephone company in the country. Unfortunately, that industry is in the throes of tremendous change. We've been hurt by the surge in wireless telephony and the fact that everybody these days carries around their own personal telephone. Coin revenues have plummeted as people use pay phones less. (Further stuff about how Zell's going to turn this mess around when pay phones morph into free internet portals deleted.)
All we're really left with is the part that I think you were trying to make the threadies here pay attention to: Zell has reservations about the high valuation of tech stocks! It's a bubble, these valuations are meaningless, it might take the whole economy down with it when it bursts, etc., etc., etc.
Gee...I've never heard that before, especially from someone who understands technology as well as Zell has proven that he does.
But in this case, to sum it all up, I got the strong feeling that Zell's reservations about tech stock valuations and the dot.com bubble are, shall we way, intimately connected with his reservations about any market trend that tends to channel investment dollars into things other than REITs. After all, the man only has $2 billion. There are kids half his age in the Valley who out of pity would toss a million in his hat if they found that out.
But there is, I'm sorry to say to anybody who's actually read this far, one more thing.
You say that Marvin Litman, who is worth a few bucks and doesn't have to work, fails to understand Zell's message.
But Zell himself repeated a basic tenet from the SUNW PermaBull Philosophy that we all (at least think we) understand. Most recently, it was stated by JDN just yesterday in #25398:
Thats why those persons (hardware stores, food merchants, LADIES OF THE NIGHT (gg), and most importantly--the liquor salesmen mostly came out RICH and so also did a FEW miners. Well, SUNW is just one of the above, you can pick which one. haha. The INTERNUTS will eventually sort themselves out and some will go on to be Mega Companies, others will not even be remembered but the INTERNET will be here forever.
And here is a rather relevant snippet from the Zell interview:
A:...Of course the Internet is an extraordinary new development with enormous implications. Yet I think there's probably a reasonable analogy to be made between the Internet and the advent of the Interstate Highway System after World War II. Both profoundly altered the business and economic landscape. But who, in the end, made huge profits from the new highway system? Certainly not the many businesses that cropped up along the new roads like gas stations, motels, fast-food outlets and the like (...) The only people who really made out were the road builders.
Q: Well, Cisco, at least, is a network road builder.
A. That's true. It's only a question with them of valuation....
So twister: Tech stock bubble. Picks and shovels. Ladies of the night. Road builders. Infrastructure. Servers. Guy selling REIT's. Hurting a little. Doesn't understand technology too well but unlike some world's-smartest-men we know of, buys into it anyway and gets a haircut.
What does all this have to do with SUNW again? <g>
--QS |
