DJ; RE:" phone phreaks "
>OTH the situation reminds me of the IBM 360s time, when there where corporations like Itel (anybody remember those dynos?) who just ate into Big Blue's margin by leasing the machines. What I mean is, a) DT is still holding the last mile in his hands and b) still has to come out in capital expenditures to develop the infrastructure. And the rest of the gang is (trying to) take the ride.
The situation with the big phone companies and network (now telco) equipment makers reminds me of these parallels:
XOI.X - BigOil : OSX.X - Oil Service
SOX.X - BigChips : AMAT, etc. Semi-Equip Makers
PNX.X - BigTels : CSCO, LU, NOK.A, etc.
When there is growth in the BigBoyz, the kapital flows to the equipment makers tends to grow even faster. But when that "rig count / book-to-bill / switch count" goes down, the big guys slow kapital spending and the equip guys tank. The BigBoyz tend to not decay so much, say - they follow the broader market.
The BigBoyz growth is dependent upon some kinda underlying commodity; ie., oil, chips, bandwidth supply and demand. But the EquipBoyz are more dependent upon capacity utilisation, with the underlying "commodity" being a leading indicator.
For the long haul investor, you gotta not only adjust your overall portfolio's leverage as a function of market kapital liquidity, but also modify the BigBoy:Equip ratios in your portfolio depending upon the prospects for kapital spending.
-Steve |
