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Technology Stocks : Leap Wireless International (LWIN) -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (2230)	6/17/2002 5:59:33 PM
From: Raymond Duray	Read Replies (1) \| Respond to of 2737

Hi Maurice, Perhaps I was using shorthand on the ECON 101 version of Supply-Demand curves. Where so many go wrong is to fail to ask: "SO WHAT?" at this juncture in the debate. Of course, as price approaches zero on any commodity, demand can rise exponentially. The basic flaw with the analysis, and those who've made it, like Gilder, the RHK crowd, Larry Roberts and the others is that they simply fail to address the matter of profit. Infinite demand for bandwidhth, when it costs almost zero, means almost no profit. Or, when we begin to examine the current realities, we find that, in fact, the capital markets have mis-allocated and lost almost $1 Trillion in mal-investments in the telecom sector in the last decade. That's a lot of money to lose. ONE TRILLION - Vanished. Perversely, the greater the demand for bandwidth, the more money was and continues to be and will be lost. Quite the paradox, unless one gives up on the simpleminded analyses of bandwidth demand, and get back to the economic reality of not offering a service unless it can afford the service provider a profit. The current wave of bankruptcies will continue to eliminate competitors who are saddled with debt for infrastructure. The eventual winners in this brutal game of cannibalizing assets will be the vulture funds like Prometheus and Carlyle who will acquire assets at pennies on the dollar, and price for a profit accordingly. This will inevitably wipe out all those who were in the first round of development, such as Global Crossing, XO Comms, all the mini-dsl types, MMDS/LMDS shops, etc. To my mind, it's only a matter of time before operations like LWIN, LVLT and others succumb to the inevitable. Their price structure simply can't adapt to the drastic over-supply of telecom assets in place.