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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (26874)	2/4/2002 4:51:50 PM
From: Softechie	Respond to of 99280

BANDWIDTH BEAT: Enron Set To Sell Broadband Assets 04 Feb 16:28 By Michael Rieke Of DOW JONES NEWSWIRES HOUSTON (Dow Jones)--Enron Corp.'s (ENRNQ) next big thing is the latest group of assets the company has put up for sale. Last month, Enron distributed a CD-ROM listing the telecommunications assets it is selling. Assets include fiber-optic data-transmission networks, telecom real estate and a few warehouses full of telecom equipment. A spokesman for Enron said he didn't know how much the company had invested in the broadband assets. An analyst said Enron spent $800 million to $900 million on the network. Now that Enron's in Chapter 11 bankruptcy, how much can its creditors expect to get from the sale? "Whatever the market will bear," said the Enron spokesman. Some would say it is a buyer's market...if there were any buyers. One of the highest profile broadband network companies, Global Crossing Ltd. (GX), filed last week for Chapter 11 bankruptcy protection, the biggest telecom bankruptcy in history. Global Crossing has lots of company under the umbrella of bankruptcy court protection. McLeodUSA Inc. (MCLD) also filed for Chapter 11 protection last week, joining Winstar Communications, 360networks Inc. (T.TSX) and others. Williams Communications Group (WCG), which has finished constructing its network, isn't going to be in the buyers pool either. Besides, like many other telecom carriers, Williams needs just about every penny it has to pay interest on its high-debt load. That is too bad because some of Enron's assets could go for pennies on the dollar. Dark Fiber Market Already Saturated The dark fiber market is already crowded. Dark fiber isn't operational because it isn't connected to the equipment that sends and receives data. It costs millions of dollars to lay fiber, but it costs 10 to fifteen times more to buy and install the equipment to light it. A report by Merrill Lynch last yearsaid that less than 5% of the fiber in the ground is lit. There are thousands of miles of dark fiber, because there is an excess of lit capacity. Enron knows that. It was the biggest market-maker in bandwidth trading last year. It quoted prices to buy and sell circuits from DS3 to OC48, linking cities in the U.S., as well as cities around the globe. During 2001, quoted prices dropped 90% or more. Those quotes are questionable because they mostly originated from Enron traders or traders at other companies that were trying to create a market for trading bandwidth. Telecom companies often said the quotes were too low, because no company was actually delivering working circuits at those prices. Enron now can only hope the telecom companies were right. Enron's metro fiber - what is known as the last mile in the telecom sector - might draw interest from buyers. While there is an excess of longhaul fiber between cities, there is a shortage of connectivity in metropolitan areas. Enron's sales material says it has dark fiber in metro areas like Atlanta, Los Angeles, Chicago, Houston and New York. It doesn't, however, give enough detail about the routes, buildings and facilities that the fiber links. Such information is available on request, according to Enron. The value of the metro fiber depends on who laid the fiber and with whom the fiber interconnects, said a source who deals in telecom assets. Buyers will be put off by the fact that some of Enron's fiber was bought from now bankrupt carriers. Turning to operational assets, Enron says it is selling "a world-class IP network designed for high quality, high bandwidth delivery and applications services." 'World-Class' Sometimes A Misnomer In the telecom sector, "world-class" doesn't necessarily mean the network works, said a former Enron Broadband Services executive. Despite such claims by telecom carriers, they all have quality problems, including Enron, he said. Enron's record with prospective network customers certainly isn't an endorsement of its quality. Blockbuster Inc. (BBI) backed out of its video-on-demand deal with Enron, saying Enron's network had too many glitches. Enron and Microsoft Corp. (MSFT) are in litigation regarding a deal for the EBS network to carry MSN's latest high-speed broadband services. A number of former Enron telecom technicians say the construction of the company's networks was hampered by its financial accounting. In order to keep expenses down, equipment wasn't installed on a circuit unless the circuit could generate revenue. That approach sounds economical, except for the fact that Enron already had bought thousands of pieces of equipment. Although the Enron spokesman said he thinks it is all new equipment, it is more likely to be unused rather than new. Since Enron started drastically cutting its broadband expenditures last summer, it probably hasn't been buying equipment lately. Telecom technicians who looked at the equipment list said that a lot of it is at least two to three years old. Much of it had a useful life of 18 months, said one technician. Cisco Systems Inc. (CSCO) might be a prospective buyer for some equipment. Last year, the equipment maker was reported to be buying Cisco brand equipment from liquidators who had acquired it from bankrupt companies. Cisco reportedly destroyed the equipment to keep it from competing in the marketplace with new equipment. A cover letter accompanied the CD-ROM of telecom assets Enron sent to prospective buyers last month. The letter asked that buyers indicate their interest by Jan. 24. But the company was still sending the information to possible buyers last week. If you are looking for a broadband bargain, give Enron a call. -By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@dowjones.com (END) DOW JONES NEWS 02-04-02 04:28 PM

To: Zeev Hed who wrote (26874)	2/4/2002 5:32:43 PM
From: m1o2n3i4c5k6	Respond to of 99280

And tomorrow we do what? Gracias