Motley Fool Still Likes CWP:
Cable & Wireless (NYSE: CWP)
Closing price 9/24/01: $12.19
52-week range: $11.01 - $45.63
By Bill Mann (TMF Otter)
Okay, it's horse-whipping time, folks. A little more than one month ago, I detailed a stock idea as a Fool on the Hill column in which I described Cable & Wireless (NYSE: CWP) as "a fat pitch." Well, shuck my corn and call me Rhonda, C&W did the obvious in the intervening days and dropped another 35%. Never, ever accuse me of having market-timing skills.
Actually, I don't really care if I do hit the exact bottom of a stock price. I am looking for companies that provide unparalleled value at current prices, and nothing that has happened in the recent few weeks have changed my original supposition. Cable & Wireless, one of the largest Internet backbone providers, satellite connectivity and global communications firms, is still really, really cheap. It is one of a precious few telecommunications companies that did not spend itself into oblivion in the late 1990s. Now, while its competitors are drowning in debt, C&W is sitting on a huge amount of cash. In fact, at a current market capitalization of $11 billion, the market has valued C&W's operations, essentially, as a net destroyer of capital.
That is a big mistake. Cable & Wireless is in an industry that is deeply troubled, and it has just gone through a significant restructuring. But it stands now both as a potential acquirer of drowning companies or assets and an acquiree by cash-hungry bigger carriers. Telecommunications has endured one of the worst reversals of fortune in history as companies drowning in debt swamped one another in a desperate quest for cash. As the shakeout comes to its conclusion, only a few companies will be left standing. Chances are good that one of the few companies with a positive cash position will be among them. That means Cable & Wireless and a precious few others.
More resources:
Is Cable & Wireless a "Fat Pitch"?
InDepth: Telecom & Networking
Bill Mann (TMF Otter) does not go by the name Rhonda. He owns shares of Cable & Wireless, which you can see on his profile. |
