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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: XBrit who wrote (61284)	10/23/2000 9:05:53 AM
From: XBrit	Respond to of 99985

The Growing Capex Crisis By James J. Cramer TheStreet.com 10/23/00 8:50 AM ET This AT&T (T:NYSE - news - boards) news is another nail in the capital-expenditure coffin. It is not what we want to hear if the tech rally is to continue, as I think it will. Understand that one of the primary drivers of technology spending is the massive deployment of high-end technology gear to meet customer demand for broadband services. We know the demand is there. But we have too many companies trying to meet the demand. So there is too much price competition and too little return on the capital spent. No matter, these companies have always operated on a "build it and they will come" thesis. And people are coming. But there are not enough people for the 14 different phone companies. So all of that spending -- the spending that has lifted every bottom line in the tech business -- may be waning. The AT&T news hammers that point home. Why would AT&T spend any money while it figures out its breakup? Why doesn't it freeze all capital spending in the interim? Why should it keep building out if no one knows what division is going to be paying for the spend? At least before the breakup proposal, we knew that cable and long distance could work hand-in-hand to make it worthwhile to spend. Now they may be working against each other! Capital expenditures, the big cycles of spending by major corporations, have held up phenomenally well in these last few years. I have tried to avoid the doomsayers on this issue. But the downbeat capex drumbeat is getting too loud for me to hear anything. When I read Herb's column this morning, for example, about Teligent (TGNT:Nasdaq - news - boards), I have to think, "Teligent, AT&T -- the capital expenditure worries are real." As I write, the first victim of the chaos, Rich McGinn at Lucent (LU:NYSE - news - boards), gets executed. And the real numbers are unbelievably bad. The woes are out of the closet now. Big-time.

To: XBrit who wrote (61284)	10/23/2000 11:51:00 AM
From: KymarFye	Read Replies (1) \| Respond to of 99985

Broadband future: Reasonable article. Only problem is that just about a year ago there were articles that sounded just as reasonable, quite possibly by the same writers, arguing the exact opposite. Ditto on wireless, whether handsets or broadband. "Video on Demand" might still be the killer app, someday, but I suspect it's still years away, and a whole different set of killer apps might turn out to be key. Also, the stuff on TiVo struck me as off the mark. If and when VOD does hit, TiVo or some future, Net-friendly version of it may well be an adjunct and multiplier (a place to put your fresh, new version of Debbie Does Dallas 27), not a competitor. I mean, c'mon, TiVo's not a delivery system, it's a recording system. If it turns out to be true that broadband's a bust, or anyway not what its prophets have been proclaiming, then, yeah, fiber and related sectors, even the whole Nasdaq, might be in big trouble. Personally, I think it's way too early to draw definite conclusions about actual and potential end user demand.