Hi guys,
Good to be back on SI. With NXTL/NXTP smashing estimates, it might be time to have a look at the telcos again. Here are some thoughts with respect to the telco space I would like to share. I do expect mega consolidation, or restructuring in telecom, and integration of multiple vendors and suppliers. The market for services has moved to a commodity based component infrastructure - anytime an industry or market arrives at those conditions there must be "meta-bundling" or industry structural changes - we are entering into a new era in telecom - I can't say what it will look like, but the guys coming out of debt, or getting more funding or hyper-integrating will come out and own the new world. It will take time - so long haul opportunity is there, although I suspect that there will be more skeletons in the closet, but fewer going forward as companies hire their own watch dogs, the witch hunt is on.
Still like some guys like sonus to get more money somewhere-other rounds, or bonds, or who knows, but infrastructure buys like them will have a hard time for next couple of quarters, and will be figuring out what the survivalist operation needs to look like-if they are credible they will find additional money somewhere-I think sonus may have a shot, but it is a difficult sector, and anything goes-I remain conservative and cautious-no quick bucks - outsourced services or whitelable/branding will move faster, they are capital efficient and that is good in a capital constrained market. Expect some meta-integrators to offer service providers alternatives than building it themselves- One I like is a (private) company called GoBeam.com.
Continued factors hampering a recovery is the scandals that plagued the mkts. The outflow of US equities resulting in a Euro parity caught most off guard and no rate fix is in the plans. Finally, shifting the stock options to the income statement as an expense should in my opinion lower the boom on most bottom lines, how much is anyone's guess, but for sure, we will see new evidence of lower guidance soon.
No crystal balls here, just some thoughts...
Sharck |
