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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (1312)	2/19/1999 8:14:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Daniel: I've always thought the railroads are a great analogy for utilities in general and cable tv in particular. Supposedly, practically all the cash coming in will fall to the bottom line once the "laying the lines" is paid off. But, as with railroads, operating and maintenance expenses are always much greater than expected. The value of rights-of-way is consistent with the fact that real estate is not depreciated -- it always has some economic value. But, valuable real estate notwithstanding, unless it's a government regulated monopoly with a guaranteed profit margin, something always goes wrong before the big cash earnings pay day arrives. Usually, that "something" is c-o-m-p-e-t-i-t-i-o-n. In the case of cable, this is delivery systems like satellite tv or video over phone lines; and there is outright competition for eyeballs like the Internet. Cable has the hitherto uncounted Intrinsic Value of being a medium for the Internet along with other two-way voice and data applications, like telephony. The Catch-22 is that retrofitting an originally one-way system requires another colossal infusion of cash. No doubt, there are peculiarities in the TCAT situation that make it attractive to GEICO. I know these guys would not invest in something that was not a valid investment in its own right -- but I wonder how TCAT's potential as an avenue by which a long distance carrier can enter the local telco market affected their calculations.

To: Freedom Fighter who wrote (1312)	2/19/1999 8:37:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

"I don't remember who it was, but it WAS a household name. Maybe Gabelli???" I think that's right. And, I think it took Mr. Market an awfully long-time to agree with him. "I could never understand the values based on earnings so I just skipped by them. Most of them don't have any earnings." Same here. I forgot to mention in the posting to Daniel that one of the analogies of cable tv to railroads is repeated bankruptcies and reorganizations. "Yet some very smart people pay some very big prices for the assets." If I recall correctly the gist of a Barron's piece of about 6 months ago, the ship came in for cable stocks when they started making money off the sports teams they owned. But, I think the pipeline itself has always had trouble earning back its capital outlays.