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Technology Stocks : Covad Communications - COVD
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To: John Curtis who wrote (60)4/13/1999 12:16:00 PM
From: Bill McCullen  Read Replies (3) of 10485
 
John,

Only problem is COVD, RTHM, Nothpoint etc are not targeting the home market for their service so they don't compete with @Home. Check out their pricing, it is over $100 a month for a 160kbps service. Media One charges $30 for a higher speed (although shared) cable modem connection. COVD, RTHM etc cannot compete for the residential market as long as they don't own the facilities (copper)which they must rent for $10-15 per month per pair. In fact, what do they really own? Some xDSL gear, routers etc is about it. They don't own the copper, they don't own the backbone and they don't own the customers. I can get xDSL from COVD with XYZ company as my ISP and if I don't like it switch to Northpoint or Bell Atlantic and still keep XYZ as my ISP.

Most people gambling on these companies have no idea what they are all about. It is a low margin business model that will be more competitive once the incumbents decide to make use of their own facilities. Does that mean that stocks won't keep going up - of course not. This market is on an unprecedented speculative bubble but, IMHO there is very little value here.

These companies are now valued at over $200,000 per subscriber based on the expected number of subscribers at the END of 1999 (35,000). Does that make sense to you for $100 a month service?

Bill
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