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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Jerome who wrote (1433)	7/9/2002 7:54:07 PM
From: Gottfried	Respond to of 25522

Jerome, from Forbes Telecommunications When Buffett Buys, A Bottom Must Be Near Mark Lewis, 07.08.02, 12:37 PM ET At last, a ray of light penetrates the dark cloud hanging over the telecommunications sector. Warren Buffett is buying. After sitting out the entire Internet/telecom bubble, the Sage of Omaha has agreed to put $100 million into Level 3 Communications. The legendary value investor's foray into a fiber-optics play could be a clear sign that a bottom for this beleaguered sector may finally be at hand. Buffett's Berkshire Hathaway (nyse: BRKa - news - people ) is joining with Legg Mason and Longleaf Partners to buy a total of $500 million in convertible debt from Level 3 (nasdaq: LVLT - news - people ). The point is not to save Level 3 from failing but to enable it to snap up the assets of its failing rivals. Buffett said in a statement that this firm "is well equipped to seize important opportunities that are likely to develop in the communications industry." And Legg Mason's Bill Miller, no slouch himself as a stock picker, said that Level 3 "is emerging as one of the ultimate leaders, survivors and consolidators in the industry." Having thus been anointed a survivor by these eminent investors, Level 3 promptly shot up 66% in morning trading. Level 3's chairman, Walter Scott, sits on the Berkshire board, but that connection did not prompt an earlier Buffett investment in long-suffering Level 3. So today's move was seen by investors as opportunistic rather than charitable. And clearly, Level 3 Chief Executive James Crowe is itching to put that $500 million to work. "It's widely recognized that the telecommunications industry is going through a period of unprecedented turmoil," Crowe said in a statement. "At the same time, however, the ongoing shakeout is creating extraordinary opportunities, as telecommunications companies, their network assets and customer bases become available." Level 3, he added, has the "management expertise and financial dry powder" to take advantage of the situation. Could Crowe's Denver-area rival, Qwest Communications International (nyse: Q - news - people ), be a potential acquisition target? Investors bid Qwest higher this morning, despite the news that Robin Szeliga will yield the chief financial officer title to an outside executive. In today's poisoned, post-WorldCom (nasdaq: WCOME - news - people ) environment, replacing a CFO is not usually seen as positive news for a telecom, especially ones like Qwest that are being investigated by the Securities and Exchange Commission. (Szeliga will stay on at Qwest as an executive vice president, focusing on ways to cut the firm's huge debt load.) The telecom sector remains shrouded in gloom, but clearly the potential consolidators are starting to raise their heads a bit and sniff around for opportunity. If Buffett is buying into a fiber-optics play like Level 3, that's a sign that telecom valuations finally have fallen low enough to tempt prudent value investors. Let the bottom-feeding begin.

To: Jerome who wrote (1433)	7/9/2002 8:00:19 PM
From: Gottfried	Read Replies (1) \| Respond to of 25522

Laszlo Birinyi rages against TA and then observes... [snip]Unfortunately, once the technical crowd thinks that it has spotted a trend, it can get carried away. As the fall of 1998 approached, a subsequent roundup of chartist projections in Barron's foresaw the Dow tumbling as low as 5000. Well, that didn't happen. By early 1999 the index was climbing nicely. Would that I had a better market-reading system myself. My own statistical analysis, which is based on comparing trading volumes on upticks and downticks, served well in the 1990s but has faltered recently. Market strategists of whatever stripe have had a rough go. The same is true for economists. This year was going to see a deeper recession in the U.S., then a recovery; now, evidently, it is seeing a recovery in the economy but not necessarily in the market. None of this fumbling about means that good stocks aren't available. Stick with those that pay you to own them, in other words, those with good dividend yields. Verizon Communications (nyse: VZ - news - people ) (39, VZ), for example, yields 3.7% and though it is in the beleaguered telecommunications group has held up well until recently. J.P. Morgan Chase (nyse: JPM - news - people ) (33, JPM) has a 4% yield; although the finance business is tough for now, this giant will not go away. If you are going to be speculative, consider a basket of stocks, such as the SPDR Exchange-Traded Fund (98, SPY), which tracks the S&P 500 and has the potential for great surprises on the upside. The market has discounted and is aware of all the bad news. Any surprises, therefore, are likely to be positive; and with cash-laden investors looking to make money, rallies are likely to be significant. That's my prediction--made without any math. forbes.com Laszlo Birinyi Jr. is president of Birinyi Associates, a financial-consulting firm in Westport, Connecticut. Visit his home page at www.forbes.com/birinyi.