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Technology Stocks : George Gilder - Forbes ASAP
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To: IndexTrader who wrote (5490)2/19/2001 4:44:42 PM
From: David Klein  Read Replies (1) of 5853
 
It depends on the company. Those companies that still need substantial funding and/or have a long way to go to complete their networks are facing tough times in the present environment. There are companies that must slow their cap ex. to conserve cash and get a better balance of expenditures and revenue until funding gets a little easier down the road. The silver lining here is to find those companies that are pre funded to complete their networks and service the debt loads while ramping up revenues by transferring and adding new traffic to their network. I am not talking about older networks but new state of the art networks that will have major cost advantages which translate into ever lower pricing but increased margins.

I could be wrong here but lots of fiber in the ground does not automatically translate into an over supply of bandwidth. Why? Because most of this fiber will never be lit. It will be cost prohibitive to do so because the technology is moving at a very fast pace. Think about the first fiber that needed repeaters every 20 km or so. (the electronics to light a fiber is the expensive part) Some companies have fiber now that can span 600 km. The next phase will span 900 km and Corning is talking about the next level which is 1200 km. It will be difficult for the older technologies to compete with the newer ones.

The type of companies that can take advantage of this are those that can upgrade their networks without a complete rebuild. IMO ATT, Worldcom, Sprint and many others will have a limited number of choices such as a rebuild costing billions and a 5 year+- time frame to complete or to use some of the new high tech networks in place now to reduce costs.

Bottom line is that a tight market forcing a slowdown in cap ex. will be good for those companies who are prefunded and have a state of the art upgradable network in place, others will land on hard times or work out agreements with these new companies to lower their costs.

I'm sure there are others that disagree but this is my opinion.
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