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Technology Stocks : PSIX up 26.5%, Takeover(?) -- Ignore unavailable to you. Want to Upgrade?

To: Ultimate Investor who wrote (4640)	8/5/1999 4:38:00 PM
From: telecomguy	Respond to of 5650

Tks for the compliment UI. I know we had some good battles last year when I was convinced that Psix was undervalued at $10 (even if I had already made 100% gain at that point in time). I was arguing that Psix's business model required for them to build, acquire market share, leverage, and find new application markets in the IP market. In my mind if Psix became an efficient consolidator all the while laying the transoceanic fibres and POP's over 20 key markets in the world, they would have good shot at attracting additional funding or being bought out at very nice premium by a PTT. Well, as it turned out, Psix got the additional funding to go at it alone and with this money, they are continuing to build and buy and consolidate..........and as result, Psix value went all the way up to $70. The problem of course is that as usual, the market completely overshot with Psix along with other Internet plays - especially the IPO's. That's when the value of Psix did not seem to me to be commensurate with the risk factor inherent in the Psix business model.....but the big concern that drove me out was the profit margin problem. I don't care what kind of business you are doing (retail, mfg, service), it's hard to make any money with a gross margin (including D&A) of 21%. Also, I was very sceptical of Psix's entry into the VoIP because of all the bull shit that was being thrown around by these new fangled IP players that claimed that they would be eating the PTT for "lunch". I think it was around that time that Schrader also made some outrageous statement (which made me nervous) to the effect that within 5 years, all PTT's and traditional Telecom Carriers will be dead in the water -- to be replaced by upstart IP based network Carriers. With Nortel and Lucent's resurgence in Data networking market, PTT's are starting to upgrade their legacy network by INTEGRATING (as opposed to replacing) with IP infrastructure -- not necessarily because it's so much more efficient than ATM or other transmission protocol but to streamline/integrate their data service offering with their circuit-switched network. Somewhere, Psix will find it's niche I suspect........quite where I am not sure yet because today Psix is not really specializing in any of the following sub-markets within the Internet industry (Web Hosting, Intenet Access, E-Commerce, VoIP, Storage, Internet Telephony, etc.). Part of the raison d'etre of Internet is that it was originally designed as a network of networks and it may be that ultimately, the market will not reward Psix's effort to acquire, build and control the IP network end-to-end around the world because it sort of flies against the original design of Internet (which held the promise that you didn't have to build your own proprietary network across geographical boundaries because you could connect into the rest of the world through the ubiquitous standard known as www) My guess is that Psix will be bought out by a Global PTT with Global ambitions like AT&T/BT or Global Crossing/QWest, etc. who may decide that at certain price point Psix will be a nice addition to their existing global network. Of course this probably won't happen for few more years until the 2 billion is spent!