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Technology Stocks : (LVLT) - Level 3 Communications
LVLT 53.630.0%Nov 1 5:00 PM EST

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To: Softechie who wrote (3007)7/29/2001 5:04:11 PM
From: flint  Read Replies (1) of 3873
 
"CLEC sector is just like Energy few years back when no one wanted to touch oil stocks thinking of oil glut."

When there is an oil glut the drilling companies shut down the wells. The investing community looks at the revenue of these companies and sell. They over sell because they forget the wells still exists, they are simply dormant. Oil companies have the ability to survive long periods of a glut. Because they have the ability to slash production costs instantly.

The difference with the CLECs is they are not dormant. These CLECs spend money whether they run at 50% occupancy or 100%. The longer they run at a lost the greater the chance they will have to dilute ownership, sell-off assets, or file for bankruptcy.

The oil company goes into hibernation during a slow down. The CLECs head for bankruptcy.

Flint
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