Gorilla and King Portfolio Candidates Message Board

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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: SecularBull who wrote (16246)	1/25/2000 1:30:00 AM
From: Brent Hogenson	Read Replies (1) of 54805

I don't believe that GBLX can ever be a Gorilla but it can be a very powerful King. There are huge advantages in being first. It is my understanding that they built their first Atlantic Crossing for 750 million, later they dropped another cable doubling their capacity for only 75 million. They can repeat this cost structure as capacity demand comes on line around the world. A new carrier would have to come up with 750 million to build an Atlantic Crossing and would be competing with GBLX's additional 75 million lines. Another trick that GBLX has in their business plan is they drop the rates they charge by 50% every year. This is causing demand to more than double. So they actually make more money by charging less. (This of course happens after they have recouped their initial investment - the first line always costs more) If I remember the Gilder Telecosm conference correctly, they sold less then 10% of their capacity on their initial Atlantic Crossing cable and recouped all of their cost. Another problem that competitors have is dropping their cable in a lot of areas around the world. Not every country in the world is eager for companies to drop cable anywhere they want, especially after they are already hooked up. Do you think anybody that wants to can bring cable right up the beach in China? I also read that carriers are having problem getting cables to socialistic countries (Telecoms are still owned by the government) - Italy for one, not to mention the good ole U.S. of A. I read about six months ago that the Costal Committee was up in arms about GBLX dropping cable in Monterey Bay California. IMHO, GBLX can never be a Gorilla. It is in a commodity business, but there are a few twist in this business that enable the first to enter to get the Lion's share of the market and profits. GBLX is years ahead of the competition. They bought 35% of the world's cable laying ships when they bought Global Marine from Cable and Wireless, now another 30% of the ships that Tyco owns are going to stop laying fiber for other companies. It seems that they want to start laying their own fiber network. So now where are GBLX's competitors going to get the boats to build a network. It takes two years to build these boats. Plus doesn't Tyco's move make this a business that is worth looking into? Then we have Global Centers that will soon be spun off to compete with Exodus (note - EXDS market cap is greater than half of GBLX's). GBLX has top rate management (Hindery of TCI and AT&T fame) running the show. And the fact that Exodus buys air time on GBLX's cables leads me to believe that Global Center will be the low cost provider. There is a reason George Gilder made this stock his number 1 Idea Stock. IMO, GBLX will never be a Gorilla but it will be one hell of a King.

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