Telcos Are Losing Battle Against Cable
By James J. Cramer
RealMoney.com Columnist
1/18/2005 4:06 PM EST
thestreet.com
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Editor's Note: This originally ran on RealMoney at 10:12 a.m. EST, Jan. 18. Cramer holds Comcast and JDS Uniphase in his Action Alerts PLUS portfolio.
All we ever heard about last year was how Verizon (VZ:NYSE - commentary - research) and SBC (SBC:NYSE - commentary - research) were going to own the video-to-the-home market. They were going to crush cable. They were going to walk all over Comcast (CMCSA:Nasdaq - commentary - research), build out like mad, really take the nation by storm.
But all that has happened since this year began is that Verizon and SBC have gone down pretty much every day. Verizon hasn't had an uptick in 14 sessions. Heck, that's worse than some of the basketball teams I see out there. What a record!
Today, of course, we see from JDS Uniphase (JDSU:Nasdaq - commentary - research), the principal beneficiary of the alleged buildout, that business is bad; you wouldn't even have noticed its shortfall if RBOCs had been ordering. That just confirms everything I thought about the Baby Bells. It isn't economic for them to compete on video. They aren't going to be players on this turf. And the cable companies are going to be players on the Baby Bells' turf because it is economic to do so.
I have to admit that I got suckered in by all of the Verizon and SBC talk myself. These guys really laid it on. But in the end, you can only lose money for so long before it is obvious that you don't have a business. Video for the Bells is not a business. Phones for the cables is not only a business but a good one.
Of course, the Bells won't come out and admit that. But thanks to the klutzes and JDS Uniphase, they don't have to. We know the truth all too well, and it's that the video-through-phone-lines garbage is just that, garbage.
You want a phone company? Go buy Comcast.
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