Eric,
Thanks for the post. Let's all say hi to Seymour first.
home.zdnet.com
Quite surprised about his level of understanding on the whole issue. His analysis on this is just mirroring those of Kevin Prigel (guess what? One of Prigel's great success is to spread rumors every day before the market opening) on StreeAdvisor.com (has good chuck of AOL holding). Haven't read about any of Seymour's stuff for years. I hope he did manage to lose some weight over the years, but looks like his blood vessel to the brain got clogged even further. Seymour, if you're reading this, take my friendly advise and make sure you take enough red wine while you're being swinish on those French food because your face looks lifelessly darker than that of three year ago.
Basically the whole article has nothing new that haven't been discussed here.
But Excite@Home will go away; AT&T will open its system; and I'm betting AOL will be one of the big winners.
I sincerely hope Seymour's stake in AOL will be a successful one (I constantly attack AOL on openNET aspect, but I try to avoid attacking AOL as an investment). The real big question here is why T spending $120 B on the cable business in the first place. Think the recent crazy exuberant on the NET2PHONE stock and the tanking of Sprint for the worry about the long distance business competition. T saw this coming way before you and me. Overall, the phone business margin will get thinner and thinner, including the telephone service using CABLE as media due to competition. Internet/content and cable/content is the reason for T's move. What's more in cable for T than TCOMA? A lot of people don't believe T cares about content business - absolutely wrong. If government ever involved in regulating the pipe, the big money in pipe would be over. Just think about California electricity deregulation. After deregulation, owning the pipe is like owning an 8% municipal bond with no future growth potential there - the beef is in generating and TRADING electricity efficiently. If T give up the thought of content, you better dump T as soon as possible.
If there are plenty of competition on the media, such as copper, government will leave cable alone (this is our hope, both GTE DSL and Cox@Home competing in my area now, and you should be happy to hear that, folks). If there is no strong competition to cable, government will make itself to be the ONLY cable ISP (may be subcontract out the maintenance work to ATHM for reasonable fee), everybody else competing on content. Cable, 40 years old, is not designed to be physically and fairly opened, IMHO, the future possibility of fiber optical line or wireless into household is the right technology for openness. T and MSOs must keep E@H long enough to get their investment money back. There is NO government money in cable up to this day, period., so government has no case in forcing T to open its cable pipe without T establishing its proven cable monopoly status.
Cable modem model:
0---X---X---X---((ATHM)T,(ATHM)Cox,(ATHM)Comcast)---(To Internet)---0
(Xs are the end users with cable modems)
At present time (before further technology stabilization and break through), T opens up, most likely means breaking up its investments in TCOMA and UMG into small pieces and resell them - ridiculous! Who is going to pay for the price that T is paying for (plus a markup) - too expensive! T has to secure its cable possession for a reasonable period of time in order to recuperate its investment. Remember that the recent $8 B corporate bond issued was the biggest ever (could be topped by Ford, please check) in history. Seymour, at present time, there is no "one of the big winners" instead we should phase it as "only one trying to survive". Any mentioning of "one" other than ATHM has to swallow up ATHM - be it AOL, Yahoo, GMGI, DELL, GTE, Sprint, or MCI. If that happen, I personally prefer a new company formed by RBOCs because they have the cash and experience to run this thing; does this sounds like AOL headed openNET plan? You bet you - and I bet you Armstrong would rather open his anal to your French food nourished dick than allowing that to happen (I am being too polite and serious on this, I tell you). So, what's the difference between that whatever new company and ATHM? AOL is a very unique case here. AOL's goal was to get out of hardware management business, so for any involvement of cable ISP, AOL needs to bring in a strong force of company(s) to carry the hardware burden. May I ask you, Seymour, who are those companies in your mind?
Do you want the following happen on cable? Want that on T, your investment? If you want it this way, you better have you pals in the hardware business to come up with solid equipment fast; otherwise, you will see your T investment sinking further based on your advise.
The model openNET wants:
0---X---X---X---((AOL)T,(ATHM)T,(RBOCs)T,(AOL)Cox...)---(To Internet)---0
(Xs are the end users with cable modems)
-------------------------------------------------------------------
DSL model: (need to use Courier font to see this properly)
0----Y----Y----Y----Y----Y----Y----Y----Y---(RBOCs)---(To Internet)---0
| | | | | | | |
| | | | | | | |
Z Z Z Z Z Z Z Z
AOL WCOM ATHM AOL T MSPG ELNK RBOCs
(Zs are the end users with DSL modems while Ys reside in the RBOCs' facilities)
For telcos, they can resell lines connecting Zs to different ISPs, if DLS become very profitable, RBOCs can make it very expensive for AOL, MindSpring or ATHM to rent it and tends to take back those lines to Zs by all means. This is a no-brainer, and with the shrinking profit on telephone business, RBOCs will not let ISP eat their lunch. Mark my word, the ISPs' consolidation will happen very soon.
I've thought and said for a long time that Excite@Home -- a content-only player that must piggyback atop someone else's wires.
My god! What a tofu brain! ATHM a content-only player? What about those $400 million spent on hardware so far? Is Excite bigger or @Home bigger? Now, tell me, Seymour, which company doing cable (or copper) ISP would not piggyback atop someone else's wires? AOL?
Excite@Home has lost about a third of its market value since mid-June, when T's waffling on this problem began to appear.
Gee, Seymour, are you applying theories of math to stock market? If ATHM interNUTing to $1,000 three months ago, should we blame ATHM lost 95% of its value? When you decided to pick up a assignment in TheStreet.com after years of superior contribution in PC Magazine, your mindset ought to change too - you're in a business of involving pump and dump and greed and fear, not PC users anymore. What is the fair value of ATHM to you? To hard to answer? Then what is the fair market value of T to you?
The only way I see to do that is for AT&T to offer to sell its stake to other shareholders at a discount, rather than the usual premium, to Excite@Home's market value.
Seymour, Look at the "lost 1/3" you said above, and can you help me connect the dots here? You still holding T? Better run for your life. I bet if ATHM price didn't get the haircut, you wouldn't come up with that piece of garbage, would you?
...is one of those stocks sitting there waiting for bad things to happen
Seymour, once again, you and Kevin Prigel sound exactly like the same person. Now, look at your pathetic image in the mirror - yes, it's people like YOU who making it happen. I can't believe you still holding T and trying to drive T's most valuable assets to the toilet!
We here have no control of Armstrong's decision. Anything is possible including a sale of E@H stake. But, it has to make sense. Does it make any sense to you? OK, OK, I have to make it simple for you? Would that help your T's holding by trashing E@H?
I'm convinced Armstrong's leadership, with Hindery's strategies pushing him
For me, Armstrong will only be a mediocre leader if his thinking process not scheduling now for how to deal with Hindery (and your career, Seymour) like what Mike did to Fredo in The Godfather episode II. Don't let his all-smiling face fool you - he can't go that far on his career for just being a nice guy with a good brain.
Finally, Seymour, I might be a little harsh on you for the garbage you WERE FORCED to put together for TheStreet.com. You have to understand the business you're in now is very different from the commentary for PC related periodicals. You're unconsciously sucked into the sewage tank containing people with all sorts of agenda. This is not as straight forward as telling K6 is better than Celeron, or whether Java will be more popular than VB. Your audiences are very different. Be honest with yourself now, does the past two session of good T's price performance change any of your childish thinking? Please, you have no business in TheStreet.com - it's running by crooks and will make you one eventually. Your place is ZDNet or C/Net. Why mess with James Cramer? Trying to find someone uglier than you to make you feel better? My friend... THINK IT OVER! |
