More Wall Street Folly
July 17, 2008
Another related sector that Wall Street has issued “sell” advice to is telecom equipment providers. Once again, this is attributed to the “macro economic” factors affecting the telecom service providers. This is hogwash, and here’s why: There may be softness in the near term because the kit telecom service providers install today has greater advanced capabilities compared to gear just a few years ago. We can readily add capacity without adding new chassis. We have the ability to issue 10 gig to 40 gig backbones while we wait as aggregation access demand fills those pipes. So the technology is better, capacity larger thus the lack of building inventories of kit.
Lastly, my final pet peeve is with Wall Street banking firms that gave away loans to unqualified unsecured creditors which is estimated at over $1 trillion dollars further to default. You are the same Wall Street firms that deny fixed asset lending to telecoms because of the risk. Yes, that fiber optic infrastructure sure has no value to be lent against it. Can you tell me what fixed assets you really had tied to your paper? The answer is another $1 trillion of nothing.
My message to Wall Street is to recognize telecom is a buying opportunity, and you need to build back your overall credibility with us. You are in a $1 trillion bad loan situation as the result of your “Do as I say, not as I do” culture of arrogance. The more fixed assets a telecom company has, the better it is as an investment. (I equate Ma Bell dependency renting with sub-prime mortgages). And in the future, try lending to telecom companies with high performing fixed assets that are scarce in supply — at least you will have more than just paper to bank upon.
It has been estimated to bring fiber optic infrastructure to every home and business in America it would be a $125 billion undertaking. That’s about 8% of what Wall Street banks will be writing down (getting bailed out by us taxpayers) for their loan “expertise.”
The hypocrisy, just like telecom CEOs and CFOs that went bankrupt during our bubble, the Wall Street CEOs and CFOs will just become economic “victims” like their telecom brethren … and virtually no one will go to jail.
Remember: the softest pillow is a clear conscience.
Written by Dave Rusin - Telecom Executive
Posted by admin | Filed Under American telecom, Telecom USA, Telecom bubble, Telecommunications industry, Telecommunications news, Trends + telecommunications, Trends in telecommunications
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