10. INTEL FEARS FOR TELECOM INDUSTRY
Speaking at the GSM World Congress in Cannes, France, an Intel (INTC, $30)
executive cautioned delegates that the telecommunications industry could
be destined for bankruptcy. In the speaker’s view, aggressive spending on
unproven next generation technologies, most notably 3G services, could
lead to financial disaster for many network operators.
COMMENT: The service provider market has seen a fair share of malaise,
with several delinquencies having been reported over the past year or so.
Nonetheless, the Intel executive was not referring to established telecom
carriers (e.g., those with diversified, high-quality asset bases), but
rather the recent entrants, or emerging service providers.
Unlike their blue-chip counterparts, many emerging carriers have tied
their fortunes to a limited number of assets, or next generation networks.
The networking equipment required to deploy new service offerings tends to
be very costly, thus burdening start-ups with oppressive debt-loads before
they can generate revenues.
Nonetheless, fears over the exorbitant costs of 3G networks are real, and
if wireless data doesn’t catch on throughout the world, nearly every
wireless service provider will suffer. Because of this, we urge you to
examine your own portfolios. If you are overweighted in wireless, now
might be the time to diversify a bit.
bullreport.com
Speaking at the GSM World Congress in Cannes, France, an Intel (INTC, $30)
executive cautioned delegates that the telecommunications industry could
be destined for bankruptcy. In the speaker’s view, aggressive spending on
unproven next generation technologies, most notably 3G services, could
lead to financial disaster for many network operators.
COMMENT: The service provider market has seen a fair share of malaise,
with several delinquencies having been reported over the past year or so.
Nonetheless, the Intel executive was not referring to established telecom
carriers (e.g., those with diversified, high-quality asset bases), but
rather the recent entrants, or emerging service providers.
Unlike their blue-chip counterparts, many emerging carriers have tied
their fortunes to a limited number of assets, or next generation networks.
The networking equipment required to deploy new service offerings tends to
be very costly, thus burdening start-ups with oppressive debt-loads before
they can generate revenues.
Nonetheless, fears over the exorbitant costs of 3G networks are real, and
if wireless data doesn’t catch on throughout the world, nearly every
wireless service provider will suffer. Because of this, we urge you to
examine your own portfolios. If you are overweighted in wireless, now
might be the time to diversify a bit.
bullreport.com
