By James J. Cramer
RealMoney.com Columnist
12/28/2005 11:53 AM EST
Covad (DVW:Amex) BEARISH
Price: $1.02 | 52-Week Range: $0.65 to $2.33
This is a company that has raised more than $1.5 billion in capital -
- including $984 million in equity -- with nothing at all to show
for it. The state politicians tended to be owned by the Verizons of
the world. So the ramp for DSL, Covad's bread and butter, turned out
to be difficult to execute.
Look at these suckers taking up this Covad (DVW:Amex - commentary -
research - Cramer's Take). It's hysterical. Has anyone ever thought
that perhaps there is no business at Covad? That it shouldn't exist
at all?
This is a company that has raised more than $1.5 billion in capital -
- including $984 million in equity -- with nothing at all to show
for it.
Covad was one of those companies that sprung up because of the
1996 "Telecommunications Travesty Act." I call it a travesty because
it managed to bamboozle billions of dollars out of people -- with
the willing help of Citigroup's Jack Grubman. The idea was always
that the law would force the Verizons of the world to support a new
group of freshly formed parasites like Covad that could force their
way into the central offices around the country.
Of course, the courts can't enforce everything that they would like.
The state politicians tended to be owned by the Verizons of the
world, and the ramp for DSL, Covad's bread and butter, turned out to
be difficult to execute.
No matter, Covad was worth $7.4 billion in 1999, as befitting
a "national broadband supplier," because those buzzwords were worth
gold. The main asset that Covad had, the one that people loved, was
the antitrust lawsuit against Verizon, the one that was supposed to
give Covad billions in value and open the central offices but good.
Now the lawsuit's been settled and Covad has the long-awaited 50%
bounce from wherever it was before. Except this time it is from 60
cents. To which I say, for what I am sure won't be the last time for
this nine-lived cat, sell! |
