May 1, 2002
The Telecosm is Dead
Long Live the Telecosm
Anyone who has
invested in the Telecosm since 1999 or so has had a ride not
unlike what cowboys experience while riding broncos in
rodeos.
Now Gilder's
favorite cowboy has been thrown from the saddle at WorldCom.
Bankruptcy cannot be far away for WorldCom and the other
carriers still left standing with large debt loads. The
carriers that have already faced bankruptcy have shaken off
their debt and will be able to operate with a much lower
cost structure and carriers with debt will not be able to
pay off their debt, ergo, bankruptcy.
What does this mean
for suppliers to the carriers? They won't be getting any
orders until the carriers themselves are out of the woods.
Since the vultures picking up the pieces probably have no
use for obsolete SONET, the SONET providers either switch or
fail. When orders start coming in they will be for new stuff
like Ethernet and TCP/IP.
Out of the ashes of
the old SONET Telecosm the new Ethernet - IP Telecosm will
be born. But will GTR subscribers make any money on the
likes of JDSU and Avanex?
I believe the new
Telecosm is still a year or more away, that's the time it
will take to bury the remains of the old and now dead
Telecosm. At the same time, the technology itself keeps
advancing by leaps and bounds. Who can tell today what the
winning technology will be a year from now, specially since
almost none of it is selling in the market just
now.
For the individual
investor, for the retail investor, Gilder's style has always
been a problem. He is a technology enthusiast who falls in
love with technology and recommends buying before the market
has given the technology its seal of approval. This early
moment is probably the right time to buy for the venture
capitalist but not for the average retail investor who makes
up the bulk of GTR subscribers. I would like to remind the
board members that George Gilder was an advisor and an angel
at garage.com, Guy Kawasaki's high tech venture firm. This
clearly confirms Gilder's status as a technology enthusiast
and as a venture capitalist.
Ask yourself the
question: "Do you fit the mold of venture capitalist and
technology enthusiast?" Despite my admiration for George
Gilder, I have finally taken the decision not to renew my
GTR subscription because I no longer receive any useful
investment advice from the newsletter.
To those of you who
will continue faithful to Gilder, I extend my best
wishes.
Denny
"Demand creates queues.
Supply gets rid of them."
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