Bernard, that's a fascinating line of inquiry you raise. Permit me to paraphrase to see if I've "got it". The thesis is that Wall Street is slinging $$$ at the Qwests of the world, driving their market caps to extraordinarily high levels. Put another way, this has made, and will continue to make, it very expensive for the investment community to get a good value to "play" the fiber optic segment. Meanwhile, the satellite stocks are in the dumper, making them a relative bargain to "play" the global interconnectivity game, notwithstanding that it's not via fiber. Fair enough?
Well, here's my concern. Wall Street's profligacy has given Joe Nachio a War Chest of very cheap currency in very huge dimensions which might PERMANENTLY alter the "mix" between fiber and satellite as regards their respective share of carrying communications traffic. The same phenomenon is going on, IMO, with the internet stocks. Yahoo and Amazon ain't dumb: they know their stock prices are beyond absurd. But in the interim they're using that hyper inflated currency to capture REAL assets, primarily market share. So when the bubble bursts, as it inevitably will, they will still wind up with something valuable, indeed irreplaceable. Something that late comers might well be permanently denied.
In other words, your thesis might well be correct and sooner or later we can expect bargain hunters to shift their capital outflows back to the satellite segment, a kind of bandwidth arbitrage. But my fear is that the industry, taken as a whole, will have been fundamentally altered by this "temporary" value disparity. You can overcome a lot of fiber's installation cost disadvantage when you can pay for digging the trenches with one dollar nickels. And of course when you're done, you've got bandwidth capacity that the birds can never touch. I'm well aware that the satellites have a role to play and certain advantages that cable can never touch, but might that role be diminished by the current market mania? Kind regards, Mike Doyle |
