Making Money in Technology
After the Bubble, page 8
The Telecommunications Capex Nuclear Winter, continued
What caused this slowdown in capital spending? Among the factors:
Overcapacity in long-haul bandwidth (much of the fiber laid is not being used yet)
Declining revenues for long-distance voice phone calls (within the next few years, this will
probably go to zero)
Slower than expected rollout of DSL (this involves issues that are more political than technical)
Overbuilding by Competitive Local-Exchange Carriers (CLECs) that was financed using junk bonds
(many of these CLECs are now out of business or heading in that direction; hence, they cannot buy
capital equipment)
In addition, a series of technology shifts in the carrier business has had negative impact first on
companies such as Lucent that built copper-based voice line equipment, and then a shift away from
packet-based router technologies towards pure optical has caused grief for network router builders
such as Cisco.
What Has Changed? The Emerging Landscape...
What has emerged is a clearer understanding that many technology industries are cyclical in nature.
Telecommunications spending presumably will come back in the fullness of time, but in the meantime,
industries that depend on it must be aware of the stop-and-go nature of this spigot.
Both private and public markets have lost their tolerance for businesses that do not have a
concrete and workable plan for reaching cash-flow breakeven.
Continued next page
Page
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
More
|
|
Search Engine Optimization
 
Syndication Viewer
Our Web host:
IX WebHosting
|
