Pat:
Excellent analysis of risk/reward. There are obviously many aspects to the concept of risk, depending on your time horizon, leverage, tax rate etc..
I'd like to welcome you as a TI shareholder. I've owned it since October of 93, and I think you'll be pleased with their fine portfolio of businesses and their recent aggressive focus on what I call the "ready mix" of the information superhighway: DSPs. If you haven't already, check out the TI thread on SI. We've got some sharp folks over there, though not quite as many as here on the AMTX thread.
Some random thoughts on xDSL, AMTX, the RBOCs etc.:
1. The entire xDSL "industry" (such as it is) remains hostage to the decisions of the RBOCs. Somebody else said AMTX and the others got "caught on a protracted time line" and I think that is right on the mark. CLECs can't make any money reselling as long as the states control the rules, so their solution is to BUILD in the places where they think they can make money soonest. This takes time. As a result the RBOCs can afford to sit back and avoid cannabalizing their T-1 service. Given the pace of change thus far, whoever said that xDSL was a Y2K phenomenon may be right. The ISPs are trying to accelerate the process, but by and large their access to capital is limited. The protracted nature of this process is what created the risk in the xDSL companies. This slow pace may also be why MOT doesn't seem to be in any hurry.
2. WSTL will have trouble maintaining an exclusive with TI as xDSL technology evolves for this same reason. WSTL is item 8 on a 10 item RBOC agenda. Therefore the "half life" of their relationships with the RBOCs is a big issue going forward.
3. On the conference call with Seamans, someone asked why WSTL "let it (AMTX) go". Simple: WSTL cannot compete with TI on price, and had to grab whatever it could.
4. JAVA apps exist because of the last mile bottleneck. The longer it lasts, the better JAVA does. Bill Gates hopes (partly) to put the brakes on JAVA by opening up the pipelines via cable modems. If only the RBOCs had the same sort of motivation!
Hope to see you soon on the TI thread!
Best regards,
Charlie
P.S. I was the guy who said that WSTL bought AMTX purely for DMT IP. I still believe it. |
