Hi gruetz:
While I was pessimist for a while, my crystal ball
is starting to become cloudy. I think we have just
hit bottom on the incumbents: note the Merrill (Hoexter)
and SSB (Grubman) reports earlier this week. The
more ``mainsteam'' among competitive carriers (MFNX,
GBLX, LVLT) should also be hitting bottom very soon,
if they have not already done so.
I am less sure about the CLECs, except that one should
focus exclusively on the quality names: NXLK, MCLD,
WCII and (perhaps, because I don't follow it) ALGX.
I don't think it makes much sense selling, but I
would hold a lot of gunpowder for the possibility
of much lower levels, say if another CLEC bites the
dust, or during the end of the year tax selling. WCOM
was a favorite of institutions so it was hit ruthlessly
during institutional tax loss selling. On the other hand,
CLECs are perhaps more in the hands of individuals,
and should see tax selling in December.
In general about telcos, as noted by Grubman, demand
for telecom services will rise rapidly during the next
5 years, and while CapEx have gone though the roof
this year and perhaps next, when the infrastructure
is in place, service providers should make a lot of
money. Telecom equipt providers who have been very smug
lately will soon start feeling the pain just as the
service providers improve. The only major wild card
is the upcoming FCC spectrum auction. If the wireless
guys repeat their performance of the UK and Germany
auctions, they will all be massacred. This kind of
insanity can no longer be tolerated.
Regards,
Bernard Levy |
