Lehman said in it's report that it interviewed telcos re carrier spending plans. If a carrier says they plan to spend less 6 months, 1 year, or 2 years out, that doesn't translate into slowing at NT now but later. The NT's and JDSU's may not be seeing the real effects of a slow down yet. First carriers like T tap the brake, then the LU's and NT's have to jam on it, then the JDSU's rear-end the bunch. That's the argument. I'm no expert but the more I see it and read it, the more it makes sense.
A note about Cramer. He's not an analyst as you mention. He runs a hedge fund. In his articles he talks about what he's doing in his fund now. Some here have complained that he led them in at NT's top. Other's here are complaining that now he says he's staying away from NT. That's crazy! The man runs a hedge fund people! By the very nature of his fund he could be talking about how he's buying NT like crazy one day and then sell it all as soon as it's up 3 points (and to think without even asking his readers' permission too!!). That's what hedge funds do. People here act as if he'd been touting NT as the greatest long-term investment around right at the top. Well if you bought and held based on that without taking to the time to think about what drives a performance minded buy like a hedge fund manager, then I'm sorry to say you got what you deserved. In fact, for many months now Cramer had been telling readers to sell some of their high octane stocks and get off margin, that these high multiple stocks had gotten too high. Them's the facts and I'm happy to say I was one of those that listened at the time.
Also in defense of Cramer's Realmoney.com (which I think is a great site), some other guys on that website started writing about slowing telcom spending almost a month ago. If you read them seriously, you'd have been prompted to lighten up a bit on the NT's and JDSU's etc.
For the record, I sold the last of my long held NT position into the first day drop and won't consider re-entering until the market stops worrying about lower future telcom spending. Right now it doesn't really matter if it will become a widespread problem or not. Just the chance of it happening means people won't pay 50,000X's earnings for a while. So the stocks go down. |
