Sal,
<<Look Fred, the market clearly believes that either 40% growth is not good enough, or unattainable.>>
This is what the market thinks this week. But what about a few weeks from now?? USRX's price action is nothing but the result of poor PR, WS panic, and general ignorance with respect to x2 and USRX's overall business. This is what is known in my book as a buying opportunity. I feel very confident that I know more about USRX's prospects, future earnings, and potential than the Street does.
<<when modems were new and rare, they deserved a large profit margin>>
There was nothing rare about about 9.6k modems when I bought mine for just under $400. There was lots of competition, everyone had them but they were all expensive because it was the latest and greatest and there hadn't been any price wars as of yet. My point is that the modem industry has already gone through a major price war and USRX has faired quite well. Sharply dropping modem prices are nothing new. The new X2 modems are priced at the same starting point as the 28.8 modems were when they first came out (i.e. around $200). I expect that their price reductions will follow a similar time table or a slightly less steep schedule since they will be the only kids on the block for a while.
<<If modems were a proprietary product (like Intel's chips, or Microsoft's Windows)>>
There is nothing proprietary about x86 architecture. I guess this means that CPU's will soon become a commoditity. After all x86 architecture chips are available from Cyrix and AMD.
<<But as our friend Mark so eloquently put it--to build a modem, all you need is a Rockwell chip, a circuit board, and some glue.>>
This is true if you want to build a generic commodity modem. However, there is only one vendor building state of the art 56k modems that are flash upgradable to whatever standards eventually emerge.
Finally, speaking of overvalued, weren't you the one touting MOT which carry's a P/E of over 30 and has seen miniscule or negative growth for many many quarters. Talk about overvalued! Hard to find a big tech company more overvalued IMO.
FF |
