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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: lurqer who wrote (3393)	9/24/2000 9:46:59 AM
From: Jill	Read Replies (1) \| Respond to of 65232

Hi lurq, thanx for that post. LoF had very kindly PMEd me a report that says the opposite; I don't think it's kosher to quote in full, but the basic point is this sector is way oversold and is healthy. Sectors do get trashed periodically and that may be a good time to buy so I bot some wcom leaps again, they're so cheap its ridiculous. Here are some highlights: SUMMARY Given the meltdown in the group, we are reiterating our bullish stance on the sector with our long-term investment thesis and favorite stocks remaining unchanged. We believe Wall Street is allowing the depression in the telecom stocks to dictate research. Telecom remains a capital intensive growth industry and many negative issues that others are pointing to are not "new" news. Technology & public policy changes have caused disruptions in the industry but we believe are positive for the industry long-term and create huge growth opportunities. We continue to believe that lower costs will drive demand for higher-bandwidth services and the notion of a bandwidth glut is preposterous. OPINION First, we believe that the revenue growth in this industry over the course of the next 5 years will actually accelerate as we shift the mix of revenue away from circuit-switched voice towards packet-switched services, optically-based services, and especially bandwidth-intensive services. Second, we believe that as capital spending goes from roughly 30% of revenue to probably 15%-20% of revenues, over the course of the next 4 or 5 years. We believe we will start to see free cash flow generation and accelerating return on invested capital as the new capital deployed in the current environment drives down operating cost and enables a slew of new applications. Third, we have always believed in the segmentation of this industry. This is a $1 trillion industry on a global basis, almost a $300 billion industry in the United States - with very different sets of telecom service buyers, ranging from consumers to SMEs to large multinationals to technology buyers that simply buy bandwidth. Thus, there is opportunity for multiple business plans to succeed. This is not an old vs. new, horizontal vs. vertical debate. Rather, the skilled management teams in every segme nt of this industry should be able to drive value. The basic tenets of this industry has remained unchanged in the 25 years that we have been associated with telecom. Technology drives down costs, which drives down prices, which stimulates demand for existing services. Secondly, Say’s Economic Law has always been valid. Namely, expansion of supply creates its own demand. Thus, new applications are enabled with the prevalence of cheaper bandwidth. The most value is driven in any element of the value chain by companies that have the most pervasive set of network assets off of which to drive the fullest product set and hence capture the most customers.ഊ2 The telecommunications services sector has typically outgrown GDP by a factor of 2 to 1 over the last 3 decades. We would argue that this multiplier will increase as network-based services become the enabler for what is a web-centric world. Whatcha think, lurq?