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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (9890)	12/23/2000 7:27:10 AM
From: MikeM54321	Read Replies (2) \| Respond to of 12823

Ray- Here's an article I thought you may have an interest in. It paints a pretty bleak picture for the telecommunications equipment industry in 2001. IMHO(and I think the writer takes a similar view) if the FCC wastes time creating laws to continue to prop up the government created CLEC business, and soon to be government propped up ISP business, then there may be more cases rolling out in the court system instead of deployments in the real world. -MikeM(From Florida) ______________________ *Taking a realistic look at the year to come* By Thomas Nolle Network World, 12/18/00--At the end of a year, it's customary to reflect on the developments of the past 12 months and the prospects for the year to come. Usually this involves a lot of fluff and drivel. Well, it's time for a reality check, readers. No kisses and hugs are forthcoming. We just killed the largest golden egg in the history of networking. In early 2000, pundits predicted the Nasdaq would catch the Dow. In 2001, we'll hope the Nasdaq's value is able to stay above 2,001. We worried in 2000 when Cisco hit 50. How would Cisco at 30 look to you? It could happen. There was a sigh of relief when the optical sector didn't crash in 2000. Expect it to crash in 2001. What was the biggest development of 2000? Wall Street cut up the credit cards of the New Age carriers. Competitive local exchange carriers (CLEC) are dead, people. What's more, one of the instruments of their demise was the downward spiral in the ISP market. A popular industry conference promotion listed all the pluses of the Internet in 2000: traffic explosions, host explosions -- everything but revenue explosions. In 2001, you'll understand that omitting revenue from the playbill wasn't an accident. Dot-everything is on its way down, too. Don't believe this? Fine, read something else. Our issue now is a simple one. We have literally hundreds of network equipment vendors funded to take advantage of the "explosion of Internet traffic" or the "emerging metropolitan opportunity" or some other totally vacuous market. Whether you believe in the conceptual market in these areas, we don't have live buyers anymore. What fuels the capital expenditures of the industry is either capital or earnings. Nobody in the new-generation carrier space is going to get capital. We've proved with years of sad history that they aren't getting earnings, either. Thus, what do they buy gear with? Get this straight: Wall Street isn't coming back to our sector until we show some sanity. Where will things go in 2001? We'll see some short-term ups and downs in the market. The Feds will loosen interest rates. PCs and chips will stage some recovery. So will Microsoft. Networking will hinge on a single question: "Do the incumbent carriers see an opportunity in new-generation services?" There are seven players in the U.S. market with enough earnings to make things happen in 2001: the four regional Bell operating companies, AT&T, WorldCom and Sprint. If these key players invest quickly in 2001, we can still salvage a decent year in networking. Two factors are keeping them out. First, as an industry we've proposed a lot of non-revenue evolution paths, such as free bandwidth, and the Internet eats public networking. Second, regulations are currently tuned at propping up the CLECs, which are now far past being propped. We need to retune them to encourage competition among RBOCs and to release the RBOCs at least into the data market. That would harness their revenue in the form of equipment investments and propel our market sector out of the red. How about equipment, assuming we get somewhat rational with the demand side of the market? The smart sectors aren't core elements like optics; they're at the edge. For example, content customer premises equipment and the so-called "service switches" will eventually be hot requirements because they enable incremental customer service spending. Carriers that invest profits instead of someone else's capital expect returns. Core follows access; simple equation. Enterprise networking can be expected to be a bit uneven, with high-end WAN technology and even server/LAN stuff taking a hit as the dot-failures impact the credibility of the Internet retail model. But low-end workgroup products should do well because the overall economy will probably stay moderately healthy, and business activity will thus remain pretty strong. The major issue in the equipment space, though, will be our friend the capital market. Venture capitalists, obsessing on one-year, 1,000% gains, will demand the New Age equipment start-ups generate sales starting Jan. 2. Venture capitalists have two choices -- ease up on the pressure and accept that we're looking deep into 2002 for profits, or bail now and lose everything. If we start seeing equipment start-ups dying for lack of late-round financing, cover your heads. Will these measures bring back the glory days? Never. Will they bring a future? Bet on it, and bet we've got a shaky one without them. nwfusion.com