 Bobo$Silvio DanteMod 2001-02
join:2000-08-30
Holland, MI
| Some More...? + notes Jato Communications
DSL.Net
...can't remember exactly, but I think there's one or two more rattling around in there...
...and there has been news about Rhythms: despite stock plunge along with every other DCLEC listed, Cisco pumped another $50 million into their coffers just last month. Unusual turn of events for a company receiving an equal "vote of no confidence" as their competitors from the market. Considering Cisco's reputation (and product line!!!!) I'm left wondering whether the stock price is telling the whole story with Rhythms, and perhaps they have a better chance of survival than the others.
Plus, for both Northpoint and Rhythms it is notable that the "ISP can't pay their bills problem" does not extend to either of those companies them (that I've heard). One wonders why Covad alone and Northpoint suffer this particular ailment, but Rhythms does not? Note: if you've got evidence to correct this statement about Rhythms, put it up, but if it's no more than "the stock price plunged so the market assumed" I will hold my correction until I see some actual press or numbers. More than happy to stand corrected: just has to be supported. Thank you!
[text was edited by author 2000-12-06 12:51:31] |
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 dru
join:2000-09-14
Corona, CA | said by Bobo:
Jato Communications
DSL.Net
...can't remember exactly, but I think there's one or two more rattling around in there...
CLEC New Edge Networks had a large layoff recently.
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Plus, for both Northpoint and Rhythms it is notable that the "ISP can't pay their bills problem" does not extend to either of those companies (that I've heard). One wonders why Covad alone suffers this particular ailment?
This is incorrect. Northpoint issued a similar correction and revised revenue regarding receivables they were unable to collect from companies like Flashcom. Northpoint simply has the "Verizon" play taking most of the attention. Rhythms is assumed to have the same issues and is being punished in the markets. |
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| reply to Bobo$
Plus, for both Northpoint and Rhythms it is notable that the "ISP can't pay their bills problem" does not extend to either of those companies (that I've heard). One wonders why Covad alone suffers this particular ailment?
You must have missed Northpoint oops in Q3. Two down, one to go.
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Jim Seymour & Karel the Computer Cat
Agents Provocateurs Extraordinaire |
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| reply to Bobo$
quote:
Plus, for both Northpoint and Rhythms it is notable that the "ISP can't pay their bills problem" does not extend to either of those companies (that I've heard). One wonders why Covad alone suffers this particular ailment?
Northpoint has indeed suffered from this, as they have already "re-stated their earnings" (uh, they wrote off bad debt). This is what led Verizion to back out of their agreement, and why Northpoint's stock bottomed out at 1% of its 52-week high. Rhythms isn't saying anything, but since they provide service to some of the same ISPs then they are suspect as well (as demonstrated by their stock price). |
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 JestocostThe Poodle Bites.
join:2000-10-19
Saint Louis, MO | reply to Bobo$
According to Salomon Smith Barney, who downgraded Rhythms earlier this week, Flashcom and Telocity account for 33 percent of Rhythms installed lines and 40 percent of their new lines in 3Q00. With Flashcom's status well documented and Telocity two quarters away from running out of cash at their current burn rate, that's a scary picture for Rhythms. In fact, SSB specifically cited concerns about Telocity's viability in their downgrade of Rhythms. |
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Bobo$Silvio DanteMod 2001-02
join:2000-08-30
Holland, MI | OK, now we're talking! But are those "bad debt" scenarios (i.e. some of 33% default, presuming that they won't default on 100% of their debt to Rhythms...equally worst-case: could be delay and payment plan rather than default) enough to offset the recent Cisco investment and the potential for VC in 2001? See, I can understand why SSB would downgrade, having not more than an eye for the stock performance, but in terms of VC and partnership potential (including full/partial buyout), I'm wondering if this is indeed enough to sink the ship. Remember, in 1999 it wasn't just Cisco shelling out the VC dough - check the record, but I do believe that Mr. Bill has a stake in the outcome here. Anybody here believe that he'll allow it to go down in flamage? |
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I can understand why SSB would downgrade, having not more than an eye for the stock performance
stock analyst interviewed on www.radiowallstreet.com yesterday when asked about the SSB downgrade of Rhythms laughed so hard he could hardly talk. He couldn't believe it had taken SSB so long to figure out there was no hope. If you want to listen go to radiowallstreet and search for RTHM. The laughter is about 7:20 into an 18 minute interview. His argument was that anyting that needs cooperation from ILECs is doomed. On the other hand, he at times sounds very uninformed (e.g., he asked scarcastically, "who outside manhattan can even get DSL?" well, lots of us have it, at least for a while longer. |
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Bobo$Silvio DanteMod 2001-02
join:2000-08-30
Holland, MI | said by mcclella:
His argument was that anyting that needs cooperation from ILECs is doomed. On the other hand, he at times sounds very uninformed
I would replace the bold print phrase with "As you can see..."
I encourage my enemies to take this analyst's advice on every stock he recommends. Internet 101: telecom act of 1996 among other things produced an entire industry employing thousands creating small, medium, and national businesses which could not have existed were it not for the clec interconnect agreements and of course open access over telephone networks beaten down by breakup and now invasive regulation and legislation yet managed to devour like wild mastodons billed revenue while simultaneously losing x% of market share not merely to clec's but also to...come on, I know you know this...ok ISP's, thank you, absolutely and without fail totally dependent upon ILECs for everything could you please name the pre-broadband product offered by ISP's having no dependence upon ILEC resources of one kind or another no I can't either to continue we might examine the dependence of the internet itself from 1996 through present day and its interdependence mainly contentwise and secondhand through agency but real nonetheless upon ILEC resources and finally could someone please explain the veracity of the idea that the push for chip and system advances in pc's and macs, software development, routers/multiplexers and CPE, not to mention languages and doo-dads (yes, doo-dads) was primarily and fundamentally based upon future trends in...say it...yes, internet access from home meaning and fully translating to OK, now I could actually see how Mr. Bill himself may owe a significant portion of his fortune to the ILEC's and their wacky infrastructure and hotcube resources end paragraph. Anyone feel like using the word "doomed" to describe Microsoft or Intel? (sit down i'm not talking to you paul allen)
Anyway, I didn't check out this guy's argument firsthand, so I'm assuming your summary points are accurate if not complete. Just can't summon myself to listen to a giggling stock analyst under any circumstances.
Apologies for the tone but I stand by the content. |
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I encourage my enemies to take this analyst's advice on every stock he recommends.
uh, so are you buying RTHM shares? you can get them for less than a buck each.
his laughter was because since March shares of RTHM have fallen from about $50 to about 75 cents and it has taken SSB that long to figure out that a "buy" recommendation might not be a good idea.
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telecom act of 1996 among other things produced an entire industry employing thousands creating small, medium, and national businesses which could not have existed were it not for the clec interconnect agreements
and how many of those small, medium, and national businesses are going out of business or laying off substantial numbers of those thousands of employees? It is bad enough that I have to try to figure out what ISP/CLEC might be in business but now I have to decide again whether I can stay with Mac (they are missing their yearly revenue estimate by $1 billion).
I found your tone more humorous than offensive. i believe you somewhat overgeneralized the analyst's use of the term "dependence." I think he was referring to companies who must depend on the ILECs to connect wires in the CO to their equipment. Given that the ILECs can't even manage to keep up with getting their own customers hooked up (at least in my area QWORST, formerly USWORST, is way behind in meeting regular POTS installation). Few companies survive in any business when they have to depend on another, unmotivated company to provide a key component of their service.
I curious as to which ISPs and CLECs you think will survive. I need to order new service soon. |
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Bobo$Silvio DanteMod 2001-02
join:2000-08-30
Holland, MI | Finally, some hard numbers:
http://www.hoovershbn.hoovers.com/bin/story?StoryId=CoI8zubWbtefusda0mW
Just as I suspected. Please post disagreements below.
mcclella: You make very good points. As for the "how many of those small, medium, and national businesses...etc." question, the answer is: surprisingly few, and all of them (that I've heard) are National or "DSL-only" resellers. Have not heard such financial problems reported nor downsizing among small or regional ISP's. I believe the big ones taking HUGE slashes amplify the problem so that you might think it's pervasive when it's actually just them. Small, independent ISP's are doing pretty good: my town has ~36,000 residents and no less than 6 small ISP's located right in town, not even including ISP's from nearby cities who offer access here. As long as I've been in the industry I've only witnessed one of those go down, and that was because they were a small, independent cellular phone company halfassing dial-up access for $9.95/mo. - that's just doomed, in the same way that free ISP's are starting to go down.
But you're totally right about the guy on the radio interview - my interpretation of him was not very accurate(although I still stand by my axiom to avoid giggling stock analysts at all costs). And no, I'm not planning to buy Rhythms stock even though at that price you really can't lose...
Finally, the key question: I believe that almost all of the ISP's and CLEC's will "survive" in the end. However, in a very Clintonian way that depends entirely on how you understand the word "survive." I think that companies like Rhythms and Northpoint and Covad will either limp along and make it on their own or they will sell off controlling interest without actually closing their doors - and not necessary to the LEC's: remember that other computer and internet-related companies out there have serious cash burning in their pockets, and if Oracle for instance decided to opt into a CLEC I wouldn't be surprised. There will be some total casualties where the lines are tossed off to other ISP's, but that's a situation peculiar to "re-sellers" whose ISP status was centered entirely on DSL rather than web services or other connectivity or networking services. And the market will not suffer one bit by losing those types of 1-dimensional ISP's. Finally, I believe upstart CLEC's who are growing in the traditional manner (rather than on the back of DSL alone) will continue to thrive and reach fruition purchase price within 4-6 years of startup - that's a gold mine no matter how many ways you slice it. And despite all of their bizarre and unreal problems, fines, complaints, and service issues I believe that the ILEC's will also be doin' just fine.
I pick Rhythms as a standalone winner in the Big Three camp based on today's wire story, but hey, they might all make it through 2001 somehow. |
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There will be some total casualties where the lines are tossed off to other ISP's, but that's a situation peculiar to "re-sellers" whose ISP status was centered entirely on DSL rather than web services or other connectivity or networking services. And the market will not suffer one bit by losing those types of 1-dimensional ISP's.
If beg to differ. My ISP could arguably be called "1-dimensional." And I, and their other customers, seem to like them just fine that way. Their focus on the core business of supplying DSL connectivity to business and professional customers has resulted in a company that does one thing, and does it well. Very well.
Are you saying there's no market for such a product?
--
Jim Seymour & Karel the Computer Cat
Agents Provocateurs Extraordinaire
Note new address |
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Bobo$Silvio DanteMod 2001-02
join:2000-08-30
Holland, MI | said by jseymour:
There will be some total casualties...
Some, but not all, that's for sure. said by jseymour:
And the market will not suffer one bit by losing those types of 1-dimensional ISP's.
Leaving some stable 1-Dimensional ISP's still profitable and operational, the Chapter 11's of that type will disappear without negatively impacting other ISP/LEC's.
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I beg to differ. My ISP could arguably be called "1-dimensional." And I, and their other customers, seem to like them just fine that way. Their focus on the core business of supplying DSL connectivity to business and professional customers has resulted in a company that does one thing, and does it well. Very well.
Indeed, what you describe sounds to me like a winning strategy. Start small with business lines, build your base, expand slowly into residential once the footprint is stable, expand some more. That's the way I'd do it if I were in charge of a DSL ISP.
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DSLR has a forum dedicated to various issues in fiber optic internet access called FTTC/FTTH (»Fiber Optic ). FYI, just in case you didn't know there was such a thing. |
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