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Technology Stocks : Global Crossing - GX (formerly GBLX)
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To: RobertSheldon who wrote (11178)5/13/2001 2:08:07 PM
From: Spekulatius  Read Replies (3) of 15615
 
Robert,
>> Do you understand their business model? They see a >2.5 fold increase in demand for every 50% decrease in rates. So your pricing pressure concerns are unfounded. <<
If the market expands by a factor of 2.5 unitwise after a 50%, the growth $wise would be 0.5 x 2.5 = 1.25 (25%). So, annualized, the market would expand by 25%. But what about profits under these circumstances. Equipment would depreciate by the same metrics (50% per year) - would it be possible for any carrier to make a profit???
As far as pricing is concerned, check the following link:
Message 15791456
Of course unit cost depends on how effectively network capacity is used, so what applies to BCE may not apply to GX in the same way. Nevertheless it is an indication of a bandwith glut,a t least on certain routes.
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