"...What (realistically ) could bring Leap down during Q3 or Q4?"
In my necessarily humble opinion, what has brought the LWIN stock price down is fear that their competition will all declare bankruptcy and they will be left pricing against debt free competitors. My opinion has to be humble because I never would have believed the price of LWIN's stock would go below $10 or so without major problems within the company and its model. I was wrong and the above explanation is the only one which accounts for all of what I know about Leap.
I doubt whether all the competitors are going to go through bankruptcy and be selling plans without fixed costs during the next two quarters, so what will cause LWIN to declare bankruptcy during that period would have to be knowledge that they would not be able to compete effectively within a couple of years and thus they too must shed their debt. But with no violation of covenants I don't think they could go into voluntary liquidation. The venders might wish to obtain assets of the company while they were still relatively valuable, but if the reason for bankruptcy were that there was no reasonable expectation for a profitable return on those assets under LWIN, then what would Lucent, Nortel and Ericy do with them?
I think the implosion of the industry is what is impacting LWIN's stock price. First additional investment dollars must stop going into the industry in the expectation of a real return. That has pretty much happened as evidenced with sales levels at LU, Ericy, NT, CSCO, etc. Then consolidation of the 8 or 12 venders all vying to provide TV, telephone, ISP, and wireless communications to everybody with a checkbook will have to come about (barring reregulation of the industry). Or perhaps some form of voluntary pricing restraint, but with that many competitors, oligopolies rarely remain effective for long.
best regards, Lance |
