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Technology Stocks : Global Crossing - GX (formerly GBLX)
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To: RobertSheldon who wrote (13077)8/3/2001 10:07:29 AM
From: CRL  Read Replies (1) of 15615
 
Robert,

GX has now been beaten down as much as the optical equipment stocks. I've been considering the timing of increasing my position in the opticals, but with GX at this level I have bought more of it. In considering GX versus the opticals, though, I had a question that I hoped you might comment on: Considering a stock such as AVNX, for instance, which shows the promise of being able to multiply by many times the data-carrying capacity of a fiber, which side of the equipment-sale transaction stands to benefit more? Let's say AVNX makes a new piece of gear that can double the cpacity of a GX fiber to carry data. Presumably the purchase of that equipment is a one time revenue item for AVNX. But for GX the opportunity to dramatically increase it's revenue generation is an ongoing item. So, if that's true the seller gets a "spike" in it's revenue but the buyer's revenue potential is raised to a higher plateau on an ongoing basis. So AVNX, for example, has to keep new generations of equipment coming to market in order to maintain a given sales level. But, disregarding pricing issues for this purpose, it would seem that the network owner has a much greater opportunity to profit than the equipment provider.

I might certainly be missing something here, but why should I buy the opticals at current prices when I can buy GX at fire-sale?

Your thoughts on the comparision would be much appreciated.

Chuck
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