Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: JDN who wrote (8804)	11/2/2000 10:09:50 AM
From: jopawa	Read Replies (1) \| Respond to of 15615

I think he is talking clecs and asp's, but still relevant reading: Wrong! Rear Echelon Revelations The Telco Shakeout Blues By James J. Cramer 11/2/00 8:31 AM ET URL: thestreet.com Just how bad are these alternative telco companies that haven't been ordering as much equipment of late? I get a lot of mail from the inside, and most of the time, it tries to put a good face on an industry I may have attacked. Not this time. The insider emails I have been receiving are scathing about this group. People are angry because they see it all unraveling. They know that 14 different telephone systems are not all going to make it. Here is a damning sample of the kind of mail I have been getting from these folks: I currently work in sales for a pre-IPO integrated communications provider, an ICP, or whatever they call themselves this year. I took a job in telecom to gain some experience. The company I was with at the time was private and promised to go public within the next six months. They never went public and missed the window when telecom stocks were hot. Now they are about to run out of money by the end of the first quarter. Now I watch both the Davids and Goliaths in telecom go through the floor and hit all-time lows. It is not hard to figure out why. Primarily, the cost to operate your own network is staggering. As you pointed out, debt has been piling up while stock prices soared. This was not a problem while companies exaggerated their potential earnings. As companies began realizing how many customers broke contracts and canceled service, they also had to face the increasing cost of the backend support. This includes consistently sending technicians out to correct problems and the ever-rising expense of developing support teams for customer issues and order entry. Combine this with ever decreasing margins due to competition and you see why the stocks have tanked. What do you think will happen once all of the Baby Bells have the shackles taken off by the Feds? Add to this the mix the disappointing results of DSL and the increase in voiceover Internet protocol and there is a slim chance your company will become the next Qwest. Sobering. I continue to think this telco shakeout is the story for the second half of this year. It is starting to impact every player. And we still have had very few outright defaults. It is just a matter of time. -------------------------------------------------------------------------------- James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to send comments on his column to James J. Cramer . -------------------------------------------------------------------------------- © 2000 TheStreet.com, All Rights Reserved.