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.

Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (11448)	5/9/2002 12:33:00 PM
From: stockman_scott	Respond to of 57684

For telecom lovers here's the latest Goldman report: "====================== NOTE 7:05 AM May 09, 2002 ====================== Key Takeaway from GS Telecom Conference: Remain Cautious Frank J. Governali, CFA (Portland) 1 207 772-3300 * Remain cautious on telecom. That's the main takeway from our conference this week. Regulatory and political breakthroughs are unlikely to occur that can pave the way towards industry restructuring in the short term. This reality puts additional pressure on the competitive environment, further pressures capital spending, and maintains the uncertainty in which companies and investors presently dwell. One bright note is that we think the Bells are increasingly realistic about their challenges and are developing priorities and strategies that over the long run will help. For now however, SBC's chairman's description of the industry outlook as 'grim but not hopeless' remains appropriate. * REGULATORY HURDLES NOT LIKELY TO ALLOW BREAKTHROUGHS. What we heard from SBC's Chairman, was a chilling reminder of how much the industry's health depends on government action. His negative statements about the prospects for industry consolidation don't necessarily reflect a change in position in Washington, but more likely a better understanding by SBC of what can and cannot get done. And, what cannot get done in the current environment are deals that can reduce some of the uncertainty and rationalize some of the destructive competitive elements, and rationalize a balkanized industry structure. Without restructuring, destructive competition will persist, and the group remains broadly unattractive. Hence, Ed Whitacre's characterization of the industry outlook: 'grim, but not hopeless.' * NO HINTS AT DEMAND RECOVERY. None of our speakers offered a glimmer of hope that there is evidence of demand recovery. Most agreed that demand conditions would probably not worsen in the second quarter. This is consisten with our models, and our view of a slow recovery in industry demand. * INTENSIFYING COMPETITION, WITHOUT INDUSTRY CONSOLIDATION. There are plenty of signs that competitive intensity could worsen in some new areas. Several examples of this were presented at our conference. First, MCI's new all-you-can-eat Neighborhood local/long distance plan, may stimulate a reaction by the Bells that would further take down long distance rates. Second, WCOM and T's efforts to gain greater direct access to business customers through local buildouts, IP services, and unbundled network elements, promises more market share losses by the Bells. Third, the spillover of wireless competition into the wireline realm, is unrelenting, as long as wireless consolidation fails to occur. * CAPITAL SPENDING IS LIKELY TO GO LOWER. The lack of demand recovery, intensifying competition, and regulatory uncertainty are all likely to keep pressure on capital spending. We expect further cutbacks in capex to be announced by both local and long distance companies. * THE BELLS GET IT. It is increasingly clear, that the Bells are aware of the risks to their business models, and are trying to take meaningful steps to confront these risks with effective strategies. This isn't a dramatic breakthrough, nor did we just discover it for the first time at our conference, but hearing from all three Bells at the same forum, made this point more clear. We saw this in SBC's YAHOO affiliation, BLS's description of new services its technology platform will allow, and VZ's graphic and realistic description of the regulatory and political landscape. Have we found cause for renewed optimism for the industry, as a result of these presentations? No, not really. But, as demand recovery occurs, and as industry restructuring unfolds over the next several years, it does give us hope that the priorities are being properly established and that given an improved environment (legal, structural, and economic) the Bells will make the right choices."