20th Century Leader Closing in on Latest
Tech Revolution (CWP)
September 5, 2001 -- Cable & Wireless (CWP) has seen its
share of technology revolutions. Since 1900, the 122-year-old
firm owned the world's largest network of undersea cable. In
the 1930s it bought out Marconi, the inventor of the radio,
and dominated that field. Now, Jason Kelly (The Neat Sheet)
sees promise in Cable & Wireless' efforts in the latest
revolution of phone and Internet convergence.
Kelly says management's strategy is to buy into the most
lucrative portions of the industry and sell underperforming
units. So far, this meant selling a large part of its wireless
business to the 100+ companies now fighting over
bandwidth. "It all looks pretty low margin and unrewarding,"
Kelly says. C&W is keeping only its 66 satellite ground
stations, the most capacity of any firm in the world. Money
from sales fund Internet development where management
sees more potential; its data services business doubles every
year.
Kelly says C&W's financials are compelling for investors. It
holds $10 billion in cash, its PE ratio is a tiny 4, price-to-sales
is just 1, and it enjoys a comfortable 36% profit margin.
Today's price near $14 is attractive considering its 52-week
high is $56.75. "Not a bad firm to own, if you ask us. It has
experience and money, it has a plan, and it's cheap at the
moment," Kelly says.
For more on Jason Kelly's advice see "Technology Ideas,"
August 2001, The Technology Digest. Nancy Zambell
excerpts from investment publications and highlights
compelling high-tech opportunities uncovered by the top
minds on Wall Street.
For a free 30-day trial go to: Technology Digest
Compiled by John Brobst, Contributing Editor
INVESTools.com |
