Latest Meltdown a Blessing?
November 24, 2008
In my last post, Consolidation in an Unstable Economy, I talked a bit about the choices open to AFS given the economy and that we’re not compelled to sell for anything other than optimal value. That said, we are also pursuing acquisitions as I am most certain the latest economic meltdown will push a few gems to the surface sooner or later.
Some think I am nuts in viewing the latest meltdown as a blessing. I thought I would never see M&A deals like the dot-com bubble pushed to the surface again in my lifetime. But here we go again … marginal companies with highly levered debt are suspect targets as the global economy reels in pain for the next two to three years. I would prefer not to have this blessing as the collateral damage of this meltdown and its innocent victims will be substantial and very unfair. However, I believe Karma wreaks havoc on people involved with over-the-top greed lacking any type of moral compass.
What I do believe will be different this go around is value being placed on hard assets. This meltdown has demonstrated the inability to hold value if you are light in assets and/or primarily paper pushing. Debt lenders have learned a valuable lesson of lending purely against paper-based cash flows. Paper-based cash flows can disappear overnight!
As one with American Indian ancestry, I have often said that those utilizing the ILEC infrastructure have the shallow root base of a willow tree. AFS has built a mighty oak with deep roots. Sure the oak does not grow as fast as the willow, but when the strong winds blow, the soft wood of the willow breaks and falls while the mighty oak remains. When hurricane winds blow, the willow will be ripped from its shallow roots, yet the mighty oak remains. I will have passed from this earth and the mighty oak networks we have built at AFS will remain for decades beyond my departure. The economy can blow its harsh winds at AFS, and this mighty oak stands.
Wall Street has little patience for growing oaks over willows. I will let you decide if the oak or “Wall Street willow” is more reliable, predictable and enduring.
Shoot Dave an email or share your comments and opinions below.
Written by Dave Rusin - Telecom Executive
Posted by admin | Filed Under American telecom, Fiber bandwidth, Telecom broadband, Telecom bubble, Telecommunications companies, Telecommunications industry, Trends + telecommunications, Trends in telecommunications
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