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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Gerald Walls who wrote (13542)	10/27/2000 12:32:30 AM
From: EJhonsa	Respond to of 24042

I think that it'd be a mistake to judge how carriers are doing financially, not to mention how much they're spending, based on the buying patterns of old-school telcos like AT&T, Sprint, and MCI Worldcom. Unlike many of their competitors, these companies still depend on circuit-switched voice for the lion's share of their revenues, and the amount of voice traffic on their networks still rivals the amount of data traffic that's existant. These companies still have major investments to protect in older TDM/SONET equipment, still favor using ATM over IP for core packet switching, and belong to bureaucratic, middle-management-loaded corporate behemoths that have always had extremely high cost structures. The implications of these facts are twofold. First, since these carriers are more dependent on voice for revenues, when they announce that they're cutting back on spending, there's a far greater chance that a large % of the cut backs will be related to central office voice-related switching equipment, especially considering that margins have gotten razor-thin in this industry, and growth has all but died out. Secondly, due to their higher cost structures and need to support a legacy infrastructure, these companies are losing significant amounts of market share in both the voice and data segments to next-generation, data-oriented carriers such as Qwest, Metromedia, and Global Crossing. With this kept in mind, I think that to get a good understanding of how carriers are doing financially, and what their spending habits will be like going forward, it's best to pay more atention to what's going on with the next-generation carriers rather than the dinosaur-like telcos; and at this point in time, for the most part, the former of the two groups is doing exceptionally well. It wasn't too long ago that Global Crossing pre-announced better-than-expected results. Meanwhile, Qwest, Level 3, and Metromedia all recently reported great quarters, with huge sequential growth increases for their backbone-related businesses, and plans to significantly increase their capacity and build out their networks going forward. Of course, the media won't harp much on any of this. For them, it's much more fun (not to mention profitable) to create horror stories related to AT&T's most recent missteps and how all this means that, high-triple-digit internet traffic growth be damned, JDS Uniphase and its ilk are now doomed. Oh well; the ensuing hysteria does create some nice buying opportunities for all of us. Eric