Wednesday January 26, 8:36 am Eastern Time
worldlyinvestor.com Sector of the Day
Telecom Q and A
By Casey Freymuth, Telecom Columnist
Answers to readers' questions about telecom stocks: Lucent, InterDigital
and more.
Telecom analyst Casey Freymuth takes readers' questions.
Q: Is this the beginning of the end for Lucent (NYSE:LU - news)?
Where's Regis Philbin? Because that's the million-dollar question.
I don't happen to think so, at least at this point -- if for no other reason than Lucent's size and reach.
Lucent maintains a mammoth presence in the telecommunications industry - one that you probably could not
appreciate unless you'd spent time in the industry. Regardless of how you slice up the telecom industry - size,
technology, geography, market development, etc. - Lucent is a major player.
It's also important to keep in mind that enablers are well positioned for years to come as they can profit on industry
growth and technological advancements regardless of who wins at the retail level.
Is this my final answer? Yes. However, I do recognize that the company is in trouble, and I won't defend it as do
analysts playing the ``if it dips to X, it's a buy' game with Lucent stock. There are clearly better places to put your
money at the moment. You can always jump on the train when it's moving north again.
Q: I've been reading your coverage of the telecommunications industry, which I believe all the readers of
worldlyinvestor.com, including myself, thank you for. It appears, however, that you've not noticed one recent uprising
star - InterDigital Communications (NYSE:IDC - news).
I can understand InterDigital's huge run in December, given its similarity to Qualcomm (Nasdaq:QCOM - news).
I think it's important to keep in mind that the company's largest boost was on the day the Paine Webber analyst put a
$1,000 price target on Qualcomm stock. This surge of 112% has since eroded, leaving the company trading in the
mid- to high-thirties from its high of 88 in December.
Clearly, this firm has the potential to capture revenues from the wireless sector's migration to third-generation
technologies. As is evident in its volatility, this stock isn't for the fainthearted. But there is definitely potential there if the
company can translate its technology patents to revenues as Qualcomm has.
Q: In your columns, you have referred to Web enablers in the communications sector. Of these companies, two stand
out: Xcelera (AMEX:XLA - news) and Digital Island (Nasdaq:ISLD - news). Have you investigated the
business-to-business e-commerce sector?
Yes. At my firm, we wrote our first B2B e-commerce business plan about three years back, and have since become
heavily entrenched in this area, performing development projects for operators and evaluations for investors. The
mainstream investment community caught on to this area in a big way over the latter half of 1999. And if market value
is any indicator, this area will likely consume the majority of client projects over the next year.
Of the two firms you mentioned, Digital Island is closer to the type of firm I was referring to in recent columns,
although Xcelera shareholders are very happy at the moment, having flirted with the $100 level just this month.
Whether you're looking at vertically focused service firms like Proxicom (Nasdaq:PXCM - news) or horizontally
focused application providers like software firm Ariba (Nasdaq:ARBA - news), the overall market opportunity for
enabling B2B e-commerce is tremendous, and telecom providers are jumping right into the thick of it.
Web-based merchandise sales and other business-to-consumer applications will soon be peanuts by comparison, as 8
of 10 business transactions will take place electronically by 2004. We began integrating this sector into this column this
month and plan to devote significant coverage to this area this year.
Casey Freymuth is president of Group IV Inc., a Phoenix-based consulting, research and publishing firm specializing in
strategic and operational matters for global telecommunications, utility and Internet companies. His weekly column
uncovers investing opportunities in telecom stocks.
Go to www.worldlyinvestor.com to see all of our latest stories.
More Quotes
and News:
Ariba Inc (NasdaqNM:ARBA - news)
Digital Island Inc (NasdaqNM:ISLD - news)
Interdigital Communications Corp (AMEX:IDC - news)
Lucent Technologies Inc (NYSE:LU - news)
Proxicom Inc (NasdaqNM:PXCM - news)
Qualcomm Inc (NasdaqNM:QCOM - news)
XCELERA.COM (AMEX:XLA - news)
Related News Categories: computers, networking, software, telecom
Archive: Sector of the Day archive |
