Cramer/Cable Will Ring Up Gains On VoIP
May 26, 2004
By James J. Cramer
thestreet.com
Cable Bullish.
Comcast is getting into VoIP.
VoIP will wipe out most land-line business in two years.
You have a head start on getting these companies while they're still low.
So phone companies don't work during power outages. That's the defense of the regional bells to the coming cable onslaught? Well, have they ever used my phone? Have they ever seen how my phone goes down every time it rains? Every time there's lightning? Every time that we get a drenching downpour, even if it lasts just a few minutes?
Yet, that's the meager defense I hear from the Baby Bells now that cable is at last getting serious about voice over Internet protocol.
This morning's "news" of coming phone service from Comcast, which isn't news if you followed even remotely what the company's been saying, is more than welcome to those of us who think that reliability is something that went away years ago when the phone companies decided that putting in new infrastructure was for losers. My cable line never goes down -- ever. I hate my phone company. I actually swear by my cable company. Someone actually comes to my house on time from my cable company. A phone man? Tell me if you see one.
I don't think I am alone. I am not a national anomaly. I believe that VoIP will wipe out most of the land line business in the next two years. That is not an exaggeration.
One of the reasons I keep putting Vonage on my television show is that this little company is stealing all the potential customers away from the cable companies I own -- Charter and Comcast -- and that means it is stealing potential growth away. And one of the reasons that cable companies have languished here is that unless they exploit VoIP first, someone else will do it on their lines, MCI-style. None of the cable companies seem to take Vonage seriously, which is funny, given that none of the brokerage companies took Jeffrey Citron seriously when he started Datek -- and they still are trying to recover from that misjudgment more than a decade later.
I think that VoIP will be huge for Comcast. Huge. It will be huge because it will make switching from cable to satellite or DSL -- the churn issue that all the bears keep talking about -- a thing of the past.
Remember my thesis for cable: Video on demand, voice-activated remote controls (next year at this time) and VoIP are the triple killers of DSL and satellite. You are getting every cable company now at a considerable discount to where I think you will get them this time next year. It's ridiculous to think that a Charter customer is worth the same present value price he has been -- $3,100 -- when he takes VoIP, VOD and has a remote that answers to his voice and can scan and download anything at the oral suggestion. It's part of what I call this market's irrational nonexuberance.
We are out of sell mode now. We are in a mode that came directly from that reversal day not that long ago that revealed the soft underbelly of the shorts. Now they are scrambling. The place they have the most scrambling to do is cable.
You have a head start.
Go. |
