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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (29101)	10/4/1999 3:13:00 AM
From: IQBAL LATIF	Respond to of 50167

Hooking Up with Global Crossing September 27, 1999 10:55 AM EDT By David H.M. Baker The technology sector has commanded center stage in the global market over the past decade, and when the future for an emergent technology is in question, knowledgeable investors often get the opportunity to own potential leaders at bargain prices. Bermuda-based Global Crossing (quote, chart, profile) is a compelling stock hidden under a cloud of controversy that fits this criteria. I believe it will become one of the dominant players in the rapidly expanding broadband telecommunications business. This is a very controversial stand as I am contradicting some of the leading industry luminaries and even a fellow worldlyinvestor.com columnist. I am astounded by how many analysts don't "get it" and continue to evaluate the feasibility of a technology based on the historical communication paradigm. To me this would be like attempting to drive a car down the road only looking in the rear view mirror. I remember reading about these same types of analysts who eschewed the personal computer saying that we would never have these devices on our desktops as they would be too large, expensive and would never achieve sufficient demand. A more recent example was Qualcomm (quote, chart, profile). All the "experts" claimed the company's rise to fame was a fluke. Their contention was that CDMA was an inferior technology and that ATT's (quote, chart, profile) TDMA standard was all that we would ever need. Well, a few short years later QCOM shares are up nearly nine-fold and CDMA is widely recognized as the superior wireless technology throughout the world. The point I am making here is that it is easier to knock an emerging technology than to embrace it, for it takes courage and vision to bet against conventional wisdom. However, those who are unafraid of going against the tide and who are able to fully grasp the significance of the emerging technologies will be the ones who benefit. Conventional wisdom today is telling us that there is a bandwidth glut and that all the "bandwidth plays" like Global Crossing, Qwest (quote, chart, profile) and Level 3 (quote, chart, profile) are destined for the same future as the telegraph, minicomputer and black and white TV. The premise is that these companies have vastly overbuilt their networks and that there is already enough global capacity to deliver all the world's bandwidth needs for years to come. The naysayers would be correct if the traffic across telecommunications networks leveled off and they were only used for the preexisting voice, data and limited high bandwidth applications in place today. What these "experts" are missing is that the bandwidth demands are going to literally explode over the next decade. Are these analysts living on another planet? Don't they realize that Internet traffic is doubling every four months? Don't they know that we have not even scratched the surface regarding traffic flowing over these future networks. The surge in demand will be lead by music downloads, enhanced digital images, as well as real time full motion video. To put this in perspective, at a recent meeting with the Level 3, the CEO spoke about a world where the network would be able to support real-time video telephony and complete end to end video services. He lead the audience through an exercise where he explained how Level 3's leading edge existing network could handle five persons conducting a simultaneous video session. Abundance is the key to the communications business model as the declining price of a once scarce resource is what has sparked the exponential increase in demand for bandwidth. The meteoric growth in the personal computer industry was propelled by this same relationship, where a scare resource was made abundant and the industry took off. The abundance of silicon resulted in increased functionality being delivered at ever lower prices. Here the greatest value actually went to the producers who pushed down their prices the fastest - Dell Computer (quote, chart, profile). How many of these "analysts" today claim a glut of transistors or silicon? Today's telecommunication networks are toast and they will be replaced by leading edge networks offered by Global Crossing and others. The current networks are very complex with electromechanical switches at their core. Future networks will become "hollowed out" where the complex electronic telecommunication switches will be replaced by "simple and dumb" optical networks where the switching is at the edges and not at the core. Global Crossing is a better play than Qwest or Level 3 since Global Crossing has the most advanced and truly global network. The company is also ideally positioned to capture a large share of the global overseas traffic. The GBLX Network is made up of seven sub-sea and terrestrial fiber optic systems seamlessly connecting more than 100 of the world's largest business and population centers. It will eventually consist of over 88,000 kilometers of communications lines, of which only 14,000 kilometers is in service today. Global Crossing is down 60% from its highs and at $24 investors can look at it like a call option on the future growth of telecom traffic. There is no question these shares still offer downside risk. However, if I am half right these shares could provide the prescient investor with returns well beyond that of the market over a five year time horizon. Still, this opportunity will only make sense to investors who can drive down the highway by looking at what's ahead, and not by navigating with their rear view mirror.

To: IQBAL LATIF who wrote (29101)	10/4/1999 6:24:00 AM
From: JDinBaltimore	Respond to of 50167

Iqbal, You've probably read this already, but for anyone who hasn't - should make for interesting open 10/4. Comments were after Friday close. latimes.com oted Analyst Sees Net Stock Shakeout By JOSEPH MENN, Times Staff Writer SPEN, Colo.--One of Wall Street's most closely watched Internet bulls said Friday that stocks in the category are "fantastically expensive" and warned that a shakeout is likely. Merrill Lynch & Co. analyst Henry Blodget, who late last year predicted the astonishing stock surge of Amazon.com and others, said in an interview that "we are probably nearing the end of a cycle" in Net stocks. "We are moving out of the period of low-hanging fruit." Blodget reiterated his earlier prediction that 75% of Internet companies will fail or be purchased, and he added that many stocks could fall 75% from current levels and "still be expensive." Speaking earlier to hundreds of Net professionals at a conference sponsored by Industry Standard magazine, Blodget acknowledged that Internet stocks have risen so high because investors recognize the legitimate historic change in the economy. But he said investors have shifted money to Web companies without regard to the valuations those stocks are commanding, which have also been driven up by the sheer scarcity of the stocks. Blodget rejected the argument that Internet efficiencies will lead to new ways of valuing stocks in the long term, saying that most stocks of surviving Net companies will eventually be valued within historical norms, relative to earnings. He said his outlook has changed little in the last two months, but that in that time the number of initial public offerings of Internet stocks scheduled for the next three months has swelled to 150. He said that will double the number of Internet companies available to investors, forcing prices down. Blodget said even Yahoo, one of the few profitable Internet companies, is priced according to the best projections for its earnings five years from now, making the shares "expensive, but not insane." He said most people should avoid investing in Internet stocks; that those who do invest should only put 5% to 10% of their portfolio in those stocks; and that even that money should be spread among 10 to 20 best-positioned companies. "Investors are far too aggressive," Blodget said. His comments, after the close of regular trading, came a week after Microsoft President Steve Ballmer called technology stock prices absurd, prompting a sell-off. Copyright 1999 Los Angeles Times. All Rights Reserved Search the archives of the Los Angeles Times for similar stories about: INTERNET (COMPUTER NETWORK), STOCK MARKET, INVESTORS, INVESTMENT. You will not be charged to look for stories, only to retrieve one. Best JDinBaltimore