I'm not saying bandwidth is going to decline or the need for equipment to furnish it. Did demand for hard drives decline in the last half of the 90's? How about demand for memory? Was it good to be long memory and hard drive companies the last 5 years?
You always refer to this explosion in demand, William. But you never talk about the supply side. There are too many optical companies vying for business from telecoms who simply don't have as much money to throw around, and their technology will continue to fill the demand for bandwidth, but that doesn't mean their profits or margins will satisfy Wall St and sustain their high multiple.
Did you read that article I posted on the AMZN thread?
"The junk bond market provided $200bn of funding for new telecommunications service providers between 1997 and 2000."
Bill, that simply isn't going to happen again. Greenspan can print & spend money until we are up to our eyeballs in liquidity, but telecom spending is never going to go back to the levels to get mo-mo stocks like CSCO, NT, LU etc to their old levels. Those large cap companies are going to target your JNPR's and CIEN's and try to kill them before they get too big for their own britches. Pricing is going to get much tougher.
>> MO, some more results from Ciena, ONI, Sonus, Juniper and Avici, and the Street will get it. They're all gaining share. <<
Hah! You act as if these are the most undervalued and under-followed stocks on Wall St! The street already "got it" long ago and bid these stocks up to rich valuations. Companies like JNPR/CIEN are going to have to execute perfectly and hope that Greenspam's money printing extravaganza can re-inflate a bubble just to maintain current valuations. To get any sort of significant return from these stocks going forward their valuations are going to have to ratchet up even further. How can you get the public to ante up the bids on all your bubble stocks with the crisis of 2005 almost upon us? There's 1.3 billion Chinese across the water, maybe you can convince them to throw money at our market, but that's not likely.
P.S. We always talk about CIEN, but I think JNPR is probably the better short. |
