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Technology Stocks : Concurrent Computer (CCUR) -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (17730)	5/5/2002 4:21:14 PM
From: Don Hand	Read Replies (2) \| Respond to of 21142

Telecom-Mess Survivors (WSJ) By ROBEN FARZAD Just when you thought things couldn't possibly get any worse in telecom land, they have. The recession slashed demand for telecommunications services, hurrying the demise of debt soaked emerging carriers like Global Crossing, Metromedia Fiber Network and XO Communications. Higher up on the food chain, things aren't much better for the "Big Three," as AT&T, WorldCom (where Bernard J. Ebbers last week resigned as chief executive) and Sprint continue to see their bread and butter long distance businesses deteriorate. That mess, in turn, has bludgeoned the equipment makers catering to these carriers -- Lucent, Nortel, Cisco, to name a few. And the sector's many dominoes just keep falling, with bankruptcy protection filings, SEC investigations and revenue shortfalls the order of the day. Come to think of it, most telecom shares won't even buy you an overseas phone call these days. That's more than enough reason to hang up on all telecom investments for good, right? Wrong. For all the hopeless disasters in the group, a handful of survivors are quietly emerging. Whether you're seeking stability or growth, opportunity knocks. Baby Bells These companies, the court ordered offspring of the old Ma Bell, are telecom's new defensive plays. Having weathered the sector's prolonged shakeout quite nicely, the Bells are now poised to snap up assets -- unlit fiber, DSL equipment, even entire networks -- on the cheap as their competitors fall. With a combined $113 billion in annual revenue and $260 billion in market capitalization, Verizon (VZ, around $40) and SBC Communications (SBC, $32) are the undisputed heavyweights of the group. Not only has their local service monopoly remained largely intact, their balance sheets are solid, and they could very well end up bidding for the Big Three's old school consumer units. Just don't expect late '90s exuberance from this group: The Baby Bells are essentially turning into utilities producing steady, if not spectacular, cash flows and paying out a chunk of earnings as dividends. Cable If it's growth you're looking for, consider cable. This is the service provider world that could care less about long distance pricing and the Baby Bells' monopoly. Digital add-ons, high speed Internet and video on demand (not to mention the mass extinction of competing small telecom carriers) will continue to drive solid numbers in the cable space. Unfairly punished alongside traditional service providers, companies like Comcast (CMCSK, $29) -- soon to be the massive Comcast AT&T -- and Cox (COX, $34) look especially attractive. Both are trading near their 52-week lows. In order to win new subscribers and milk them for bigger fees, all cable companies are racing to deploy video on demand. Two companies poised to ride its surging popularity are video on demand providers Concurrent Computer (CCUR , $7) and SeaChange International (SEAC, $11). It's only a matter of time until investors pluck these babies out of the telecom bathwater. "Cable has been unfairly associated with telecom's problems," says RBC Capital Markets' David Lee Smith, a top ranked Wall Street analyst. "In fact, it's in much better shape and has lots of growth ahead." Which is to say that the future of telecommunications might not be in telecom at all. Roben Farzad is a staff reporter at SmartMoney magazine. E-mail: editors@smartmoney.com. Updated May 5, 2002