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Microsoft, NVEI and Comdex in Las Vegas 2002.
As Dilt-1 reported for me when I called in from the Comdex floor today Microsoft is prominately displaying in there newest division called Windows Media 9 Series, formerly Corona, our trailor from SIL.
Dozens of MSFT black shirted employees and casts of hundreds were held spell bound by SIL and of course the Media 9 capabilities.
The MSFT techs have all viewed SIL and without exception can't wait for a full screen release in a theater this spring. The photography, even on flat panel room TV / computer screens, was simply breathtaking and if they are our market audience, then, when SIL is released in the Spring according to there info, it will be a wonderful success for us all. eom
New Visual Corporation Announces Stock Purchase by Chief Executive Officer
11/18/2002 6:01:00 AM
SAN DIEGO, Nov 18, 2002 /PRNewswire-FirstCall via COMTEX/ -- New Visual Corporation (OTC Bulletin Board: NVEI), an emerging provider of semiconductors to the high-speed data networking industry, today announced that its chief executive officer, Tom Cooper, has purchased 32,258 shares of its common stock, NVEI. The purchase amount is equal to the close of the OTCBB on Friday, November 16, $0.62. The total invested amount is $20,000.
"New Visual has the potential to become a strategically important company in telecom," said Tom Cooper, president and CEO of New Visual Corporation. "With an upcoming planned product release and interest from target customers, New Visual is for me personally a compelling investment opportunity."
Pengy, you are correct..We have him on tape.......
One year ago Today @ the Crown Plaza in Vegas investor heard Ray turn down $100 per share as a consideration at our meeting of approximately 50 stockholders.
This is long before Tom, Brad and Fred joined NVEI.
As Paul Harvey is famous for saying:
"and now, the rest of the story". eom
Austin.....No they aren't PR's...
denise.....just like dutchf indicated I also believe the majority of restricted are in the hands of long term investors and all of the Vegas investors I know will simply register and hold for the big buyout down the road.........
The Company already has the money for selling one year restricted shares which automatically become freely tradeable the earlier of an accepted buyout or 1 year from date of issue.
I know of about 5,000,000 restricted shares sold under 50 cents each around the end of last year and 1st quarter of 02.
hitimer.........you are correct but there is approximately 25 million 144's close to maturity, imho......
34Simmons
It seems somewhat reasonable to assume that since GSPN has approximately $400 million in cash available they could easily take an equity position of 19% in NVEI with no downside risk to them, nor poison pill trigger[expires August 21,2004] to NVEI.
As a speculation note, GSPN could scrap their G24 chipset in favor of ours with little future risk to them "if we have the speed and distance" everyone assumes.
GSPN would only need to accumulate 10,000,000 shares to ride our waves [no pun intended Ray] and even open market purchases at this time would appear to the casual observer a price of less than $10,000,000 to be our largest individual stockholder block.
Now personalities come into play with TC and his former employeer vs a second under current with RW and his goals. Whatever the case may be the next 6 months should be exciting, imho.
From NVEI website last Friday:
"At this time, we are pleased to note that GlobespanVirata's announced performance for its Titanium G24™ chipset is significantly less than we expect to achieve with our first product offering.
While we believe we will be able to compete based on the special features of our products, the markets for semiconductors and other high-speed telecommunications products are (and will remain) highly competitive. We will compete with numerous companies with well-established reputations in the broadband telecommunications industry, including GlobespanVirata. In all of our target markets, we also may face competition from newly established competitors, suppliers of products based on new or emerging technologies, and customers who choose to develop their own silicon solutions. Our products will also compete generally with products using other broadband technologies, such as cable modems, wireless, satellite and fiber optic telecommunications technology."
We have no debt to speak of. Watch and wait...
Dr. Greaves and TC hopefully were aware prior to this announcement. What impact if any will this have. IMHO this may be good for us..
GlobespanVirata Doubles ADSL Speeds With G.SpanTM Technology Fully Upgradeable to New ITU Standards G.Span extended rate and reach technology shipping now on GlobespanVirata's Titanium G24TM chip set
RED BANK, N.J., Oct 30, 2002 (BUSINESS WIRE) -- GlobespanVirata, Inc. (NASDAQ: GSPN), today announced the immediate availability of its G.SpanTM technology which doubles ADSL speeds while offering full upgradability to the new International Telecommunication Union's (ITU) ADSL2 and ADSL+ standards.
GlobespnVirata's G.Span extended rate and reach technology enables a family of products capable of doubling the rates on GlobespanVirata's Titanium G24 TM chip set and offering up to 30% greater reach over existing high-speed ADSL solutions. Additionally, G.Span technology is compatible with all existing ADSL solutions, and will allow service providers to seamlessly migrate to high-speed DSL services using their existing infrastructures. The Titanium G24 G.Span product family offers rates starting at 16 Mbps and is shipping now.
GlobespanVirata's Titanium G24 G.Span product family allows equipment manufacturers and service providers to rapidly meet the worldwide demand for low-cost, high-speed data and video applications, long recognized as the leading advantage of ADSL technology. In many countries, for instance, Titanium G24 with G.Span can enable higher speed Internet access data rates required to satisfy consumer and business demand. Likewise, in European countries where the demand for high-bandwidth video applications is increasing, GlobespanVirata's Titanium G24 with G.Span technology will enable VDSL-like applications such as multiple channel video and HDTV. In using the Titanium G24 G.Span product family to meet the demand for these premium services, equipment manufacturers and service providers alike will have an opportunity to significantly increase revenues using their current equipment and infrastructure.
"The release of our G.Span high-speed and extended reach technology comes at a time when service providers around the world are calling for high-speed DSL products that also offer greater reach to meet growing consumer demand for higher-speed Internet and broadband video access," said Angelo Stephano, GlobespanVirata's Vice President of Marketing. "The data rates for high-speed ADSL continue to increase, and with them service providers and equipment manufacturers' expectations for technology that will deliver higher and higher ADSL speeds. GlobespanVirata is proud to be the first and only DSL solutions provider to have met these expectations with a new product family that doubles existing ADSL speeds and offers extended reach and upgradability to new high-speed ADSL standards, thus facilitating greater revenues throughout the DSL industry."
Titanium G24 with G.Span Features
The Titanium G24 G.Span product family incorporates GlobespanVirata's field proven DSL algorithms, built in programmability, low power DSL operations and 24 ports per chip set. Additionally, Titanium G24 with G.Span offers:
Think NVEI being involved here when reading! imho
By BRIAN STEINBERG
Dow Jones Newswires
NEW YORK -- In his first presentation before the general public since being named to his post, America Online Chairman and Chief Executive Jonathan F. Miller said the popular Internet service could become a vehicle for programming that would increasingly take on characteristics similar to television cable networks.
Speaking before a sparse crowd at the annual Internet World conference, Mr. Miller didn't directly discuss the recent troubles at AOL Time Warner Inc.'s Internet unit. But he described America Online as "a company that is in the news every day and every way, whether we want it to be there or not" -- a possible reference to the current regulatory probes into accounting practices at America Online, or investor perceptions that the operation's flagging performance has contributed to a sharp drop in AOL Time Warner shares.
Mr. Miller, a former executive at USA Interactive, joined America Online in early September, part of a turnaround effort to retool the way the online entity does business. Since taking charge, he has eliminated America Online's deal-making unit and reorganized its executive structure.
While Mr. Miller didn't take any questions, he sketched out a variety of new initiatives that America Online would be developing in the near future. His remarks were similar to those of AOL Time Warner Chairman Steve Case, who on Tuesday suggested ways that America Online could be used to develop a digital-media delivery service as well as a new sort of "personal television."
The new ideas include "a spirit of taking back this company, taking it back for our members," Mr. Miller said. America Online's future development, he said, would hinge on making the service more available and more desirable to its 35 million subscribers.
Developing America Online via broadband is a top goal, he said. "Our commitment to broadband is clear, and it is unwavering," he said.
Broadband users should soon be able to have separate screens and community features crafted exclusively for them when the service launches its version 8.0 this month. Mr. Miller also spoke of a goal of getting members to take "elements of their daily habitual behavior and transfer it to broadband habitual behavior."
In terms of content, Mr. Miller promised "a lot more firsts and exclusives," such as celebrity chats, more entertainment programming and more "special deals for members." Echoing recent statements by other AOL Time Warner executives, he pointed to a new initiative launched this summer that has offered subscribers a sneak listen to unreleased songs from artists like Tom Petty and the Heartbreakers and Bruce Springsteen.
According to Mr. Miller, executives also want America Online to become more integral to subscribers' lives, with more "appointment" events and "more reminders." Additionally, some programming and offerings could become part of "premium content and services that our members will pay extra for," he said.
Mr. Miller also hinted at the development of a concept called "match chat," an extension of the company's popular instant-messaging services that allows users to communicate in real-time. He didn't elaborate.
Write to Brian Steinberg at brian.steinberg@dowjones.com.
See full coverage at http://wsj.com/AOL
Question. Are we part of their future?
Intel unveils network "system-on-a-chip"
By John Lui
Special to ZDNet
September 6, 2002, 8:10 AM PT
Intel this week unveiled new chips that enable more powerful and space-efficient computers to be created for telecommunications networks.
Faster chips are needed to handle the load imposed on next-wave data networks by applications such as 3G or voice recognition services, said Benjamin Naden, product marketing manager with the Intel Communications Group.
"The telecommunications market is hell right now," he said. New services are needed to generate much-needed revenue, but these will cause immense pressure to build on existing infrastructure, he said.
"By distributing the processing to the edge instead of the core, you take some of the load off," he noted.
The first new product, the IXC1100, is a "system-on-chip" designed for such "edge" computers, handling tasks such as voice recognition, complex switching, and voice over Internet Protocol (VoIP) processing for both wired and wireless networks.
The IXC1100 is Intel's first foray into the world of control plane processors, all-in-one devices which process and route data when built into "line cards". These cards are slotted into computers to add specific capabilities. The IXC1100 is built around Intel's XScale processor, a chip that is used in handhelds, smart phones and other mobile devices.
Despite an overall gloomy outlook for the telecommunications market in general, capital expenditure for communications and IT infrastructure in South Asia is expected to grow this year, according to analysts IDC.
From $14.6 billion in 2001, the figure is expected to grow by 7.8 percent to $15.8bn by year end, led by the growing economies of India, Malaysia and Singapore.
The IXC1100 control planed processor will be available in the last quarter of 2002, in speeds of 266MHz, 400MHz and 533MHz. The 533MHz version begins at US$55 in thousand-unit quantities.
John Lui is a reporter for CNet Asia.
ot. If the shoe fits all!
RealMoney.com : James J. Cramer WorldCom Shouldn't Be Allowed to Live
By James J. Cramer 09/05/2002 01:06 PM EDT
Indict WorldCom (WCOEQ:Nasdaq - news - commentary - research - analysis).
That's what the feds should do. You can't have a fraud this big and expect to stay in business. It just isn't right. There is no national interest that has to be protected here; people can switch to other phone companies. There is no justice, though, to allowing WorldCom to stay in business after all that it has done to take advantage of its shareholders and to wreck the marketplace. It makes no sense. Why should this company be allowed to continue operating?
Consider the contrast: Arthur Andersen. One could contend that the company was a recidivist, a repeated bad actor, so it had an indictment coming. Still, WorldCom had no chance to be a recidivist: it was a multiyear fraud. Why should someone who worked at the company and served in a high executive capacity as did John Sidgmore, the current CEO, continue?
Any company that competed against WorldCom knows that this was a crooked company that lied and lied and lied to get capital so it could continue to compete. It should have been out of business years ago.
Now it is allowed to stay in business as we indict one exec after another. That's just wrong. To hide $7 billion in fraud takes an army. The army was WorldCom.
The feds should indict the company. Now. That's the only way to level the playing field again and maintain some sense of justice after what WorldCom has perpetrated on the markets.
Mr. USA.....What happened to change your excellent forcast?
You thought on Aug 15th the following..............
Mr_USA_1992 $$$$$
15 Aug 2002, 07:32 AM EDT Msg. 34567 of 36500
thinking wave 4 might run to 100% fib at GR1 today, that will be about a double top with previous high about 992, a Phi-Ellipse draw on that basis puts us about NDX710ish in beginning of Sept.
34Simmons
This certainly applies to our NVEI management.....Hope they follow the others..
30 Aug 2002, 06:49 AM EDT
Doubts Grow on 'Covering' of Options
By JOSEPH B. TREASTER and TRACIE ROZHON
Corporations across the country have halted a longstanding practice of allowing executives and directors to exercise stock options without putting up their own money in transactions that are often worth millions of dollars.
The decision to halt these arrangements — a routine practice at public companies — is being driven by uncertainty over whether they may now be considered loans and therefore criminal violations under a recently passed law aimed at curbing corporate abuses.
These arrangements, usually called cashless exercises of stock options, allow executives to quickly cash out options granted by the company as part of their compensation. A stock option, granted by the company, gives an executive the right to buy stock at a set price, and he does so when the market price is higher. For example, an executive with 100,000 options priced at $10 would buy 100,000 shares for $1 million. If the stock was then trading for $20 a share, the total value would be $2 million and the executive would have an immediate gain of $1 million. But to start the process, he would need $1 million.
In the past, the company "covered" that amount until the trade was settled, usually within one to three days of the sale. That is the period in which the company is now thought to be making a loan — and the period in which, tax lawyers say, companies may be breaking the law.
Unlike some of the arcane accounting tricks that led to the recent corporate problems, cashless exercises of options are a common and, until now, completely legitimate form of employee compensation. Companies hand out stock options to give employees a chance to feel that they own part of the show. They hand them out to the top executives to lure them in the first place, or to keep them, and these high-level stock options can be worth millions of dollars.
According to experts on executive compensation, virtually all of the country's public corporations have stopped allowing these cashless exercises of executive options. Sandra L. Sussman, the executive director of the National Association of Stock Plan Professionals, estimated that at least 525,000 board members and executives had been affected. (Executives are usually considered those at the level of vice president and higher, heads of corporate divisions and any others who make policy within a company.)
"There are 15,000 public companies out there, and just about every one of them issues stock options to their executives," said Peter J. Romeo, a securities law specialist in the firm of Hogan & Hartson. "The likelihood is that a day doesn't go by without some executive somewhere doing a cashless exercise."
Though tens of thousands of rank-and-file employees also receive stock options as part of their pay, the new law applies only to executives. At Microsoft, a spokeswoman, Caroline Boren, said the company had stopped participating in cashless exercises — for board members and executives — pending clarification of the law.
Sullivan & Cromwell, a leading financial services law firm in New York, and many others around the country have advised clients to halt the cashless exercises.
"We're saying, `Hold off until we and others figure out how the law applies in this situation,' " said William J. Williams Jr., a partner and securities specialist at Sullivan & Cromwell.
The uncertainty over cashless exercises of options has also added to the headaches of accountants and tax lawyers as they struggle to understand all the ramifications of the Corporate Responsibility Act of 2002. The law, signed by President Bush on July 30, bars companies from making loans or arranging loans for executives, but it does not spell out exactly what constitutes a loan or the arranging of a loan.
Andrew L. Oringer, a lawyer at Clifford Chance Rogers & Wells in Manhattan, specializing in executive compensation, said he, too, was unclear whether the transactions were actually loans. But he said the law would probably apply equally whether the company in effect extended credit for the transaction or, as is sometimes the case, arranged for a broker to do it.
"The new law not only prohibits loans from the company but loans arranged by the company," Mr. Oringer said.
Many public corporations have already suspended payments on billions of dollars in executive life insurance for fear that they may violate the law. Many companies are also questioning whether they must also stop making loans to executives in connection with 401(k) retirement plans and for the purchase of homes.
But no affected corporate practice is as far reaching as that of the option transactions. In Washington, Mr. Romeo said that he advised about 100 major corporations and that he had not heard of one yet that had not halted the loans.
Mr. Romeo said that he did not consider the loans an abuse and that he thought they ultimately would be found to fit within the law. "But I can't tell clients there is no risk," he said. "No one can."
"Most of the companies," he said, "are saying, `Let's stop doing this for the time being.' "
Many corporate lawyers say that — though they cannot be sure — they doubt that Congress intended to prohibit the cashless exercises. But Senator Charles E. Schumer, who wrote the section in the law that focuses on personal loans to executives, said he thought the law did indeed apply to these transactions.
"I believe they probably are banned," Mr. Schumer said in an interview.
He said that when the law was written, "we were not aware of every type of loan that's made."
"But," he added, "the bottom line is that the corporation is not an arms-length lender to its top executives. And in this case, particularly since the loan is so short term and well collateralized, there's no reason they can't find financing apart from the corporation."
Where there is doubt, companies usually look to the Securities and Exchange Commission for guidance. But in a conference of securities lawyers broadcast on the Internet on Aug. 15, Mauri Osheroff, an associate director of the S.E.C., said the agency had not decided how to rule on such loans.
"I think that, at least for the immediate future, we'll let you all decide how to handle the interpretation, both as regards to cashless exercises and as regards to the number of other transactions that we've gotten questions about," she said.
In an interview last night, John J. Nester, an S.E.C. spokesman, declined to provide clarification. "We have no immediate plans to issue guidance on this," he said, "but we are sensitive to the concerns of lawmakers, market participants and the investing public."
This certainly applies to our NVEI management.....Hope they follow the others..
30 Aug 2002, 06:49 AM EDT
Doubts Grow on 'Covering' of Options
By JOSEPH B. TREASTER and TRACIE ROZHON
Corporations across the country have halted a longstanding practice of allowing executives and directors to exercise stock options without putting up their own money in transactions that are often worth millions of dollars.
The decision to halt these arrangements — a routine practice at public companies — is being driven by uncertainty over whether they may now be considered loans and therefore criminal violations under a recently passed law aimed at curbing corporate abuses.
Advertisement
These arrangements, usually called cashless exercises of stock options, allow executives to quickly cash out options granted by the company as part of their compensation. A stock option, granted by the company, gives an executive the right to buy stock at a set price, and he does so when the market price is higher. For example, an executive with 100,000 options priced at $10 would buy 100,000 shares for $1 million. If the stock was then trading for $20 a share, the total value would be $2 million and the executive would have an immediate gain of $1 million. But to start the process, he would need $1 million.
In the past, the company "covered" that amount until the trade was settled, usually within one to three days of the sale. That is the period in which the company is now thought to be making a loan — and the period in which, tax lawyers say, companies may be breaking the law.
Unlike some of the arcane accounting tricks that led to the recent corporate problems, cashless exercises of options are a common and, until now, completely legitimate form of employee compensation. Companies hand out stock options to give employees a chance to feel that they own part of the show. They hand them out to the top executives to lure them in the first place, or to keep them, and these high-level stock options can be worth millions of dollars.
According to experts on executive compensation, virtually all of the country's public corporations have stopped allowing these cashless exercises of executive options. Sandra L. Sussman, the executive director of the National Association of Stock Plan Professionals, estimated that at least 525,000 board members and executives had been affected. (Executives are usually considered those at the level of vice president and higher, heads of corporate divisions and any others who make policy within a company.)
"There are 15,000 public companies out there, and just about every one of them issues stock options to their executives," said Peter J. Romeo, a securities law specialist in the firm of Hogan & Hartson. "The likelihood is that a day doesn't go by without some executive somewhere doing a cashless exercise."
Though tens of thousands of rank-and-file employees also receive stock options as part of their pay, the new law applies only to executives. At Microsoft, a spokeswoman, Caroline Boren, said the company had stopped participating in cashless exercises — for board members and executives — pending clarification of the law.
Sullivan & Cromwell, a leading financial services law firm in New York, and many others around the country have advised clients to halt the cashless exercises.
"We're saying, `Hold off until we and others figure out how the law applies in this situation,' " said William J. Williams Jr., a partner and securities specialist at Sullivan & Cromwell.
The uncertainty over cashless exercises of options has also added to the headaches of accountants and tax lawyers as they struggle to understand all the ramifications of the Corporate Responsibility Act of 2002. The law, signed by President Bush on July 30, bars companies from making loans or arranging loans for executives, but it does not spell out exactly what constitutes a loan or the arranging of a loan.
Andrew L. Oringer, a lawyer at Clifford Chance Rogers & Wells in Manhattan, specializing in executive compensation, said he, too, was unclear whether the transactions were actually loans. But he said the law would probably apply equally whether the company in effect extended credit for the transaction or, as is sometimes the case, arranged for a broker to do it.
"The new law not only prohibits loans from the company but loans arranged by the company," Mr. Oringer said.
Many public corporations have already suspended payments on billions of dollars in executive life insurance for fear that they may violate the law. Many companies are also questioning whether they must also stop making loans to executives in connection with 401(k) retirement plans and for the purchase of homes.
But no affected corporate practice is as far reaching as that of the option transactions. In Washington, Mr. Romeo said that he advised about 100 major corporations and that he had not heard of one yet that had not halted the loans.
Mr. Romeo said that he did not consider the loans an abuse and that he thought they ultimately would be found to fit within the law. "But I can't tell clients there is no risk," he said. "No one can."
"Most of the companies," he said, "are saying, `Let's stop doing this for the time being.' "
Many corporate lawyers say that — though they cannot be sure — they doubt that Congress intended to prohibit the cashless exercises. But Senator Charles E. Schumer, who wrote the section in the law that focuses on personal loans to executives, said he thought the law did indeed apply to these transactions.
"I believe they probably are banned," Mr. Schumer said in an interview.
He said that when the law was written, "we were not aware of every type of loan that's made."
"But," he added, "the bottom line is that the corporation is not an arms-length lender to its top executives. And in this case, particularly since the loan is so short term and well collateralized, there's no reason they can't find financing apart from the corporation."
Where there is doubt, companies usually look to the Securities and Exchange Commission for guidance. But in a conference of securities lawyers broadcast on the Internet on Aug. 15, Mauri Osheroff, an associate director of the S.E.C., said the agency had not decided how to rule on such loans.
"I think that, at least for the immediate future, we'll let you all decide how to handle the interpretation, both as regards to cashless exercises and as regards to the number of other transactions that we've gotten questions about," she said.
In an interview last night, John J. Nester, an S.E.C. spokesman, declined to provide clarification. "We have no immediate plans to issue guidance on this," he said, "but we are sensitive to the concerns of lawmakers, market participants and the investing public."
Lots of Bells certainly would like our revenue chip.
29 Aug 2002, 8:52 PM EDT BellSouth Corp. (BLS), the No. 3 U.S local telephone company, said on Thursday its 2002 earnings would fall below Wall Street's already-reduced expectations due to a restructuring and weak revenues in its wireless business, and the turbulent economy.
BellSouth said it expects its 2002 earnings to be in the range of $2.06 to $2.13 a share, or 7 cents a share below its previous guidance. Wall Street analysts expect the company to earn $2.14 a share, according to research firm Thomson First Call.
The Atlanta-based company has cut its full-year forecast at least four times this year. BellSouth and other Baby Bells have been slammed by the weak economy and a shift to electronic mail and wireless phones, which has reduced the number of telephone access lines in service.
BellSouth blamed the latest change in its earnings guidance on weak wireless telephone revenues, the cost of cutting jobs at its Cingular Wireless joint venture, and continued economic weakness in its domestic business.
"We've ... seen signs that recovery and growth are not imminent," BellSouth Chief Financial Officer Ron Dykes told analysts last month in a conference call. "Business failures and bad debt continue to take their toll.
Shares of BellSouth, the dominant local telephone company in nine Southeastern states from Kentucky to Florida, closed Thursday at $24.25, down 19 cents, on the New York Stock Exchange. The stock has fallen about 36 percent this year, underperforming the Standard & Poor's 500 Index by about 20 percent.
Cingular Wireless, BellSouth's wireless joint venture with SBC Communications Inc. (SBC), last week said it would cut 3,000 jobs, or 7.5 percent of its work force, to cut costs. Cingular, the No. 2 U.S. wireless phone company, said severance and other costs for the job cuts would cost less than $70 million.
Cingular Wireless had added more new subscribers than expected in the second quarter, helped by lower customer turnover and the introduction of new price plans earlier in the year. Analysts had expected Cingular's third quarter results to get a boost from its recent launch of service in New York City, the nation's biggest wireless market.
Telco Hopes Have Been Abandoned, So Buy
OT
By James J. Cramer
08/29/2002 08:19 AM EDT
Throughout this horrid telecom downturn, managements, analysts and the press always have presumed that the big dogs, the Lucents (LU:NYSE - news - commentary - research - analysis)
and the Nortels (NT:NYSE - news - commentary - research - analysis)
and the Cornings (GLW:NYSE - news - commentary - research - analysis), would survive.
All through the downturn I have been saying that this industry's troubles were too great, and as long as there was hope, these stocks would go down.
This was the week where all hope was taken away. Nortel's slipping below $1. No one is even talking about Corning or JDS Uniphase (JDSU:Nasdaq - news - commentary - research - analysis) making it to the promised land in their current configurations.
This morning's Heard on the Street column in The Wall Street Journal reads like an obituary for the industry, openly acknowledging what I have been saying: that many of these companies are going out of business.
And that's exactly why I'm buying them.
You make a field bet like this only when you think that all hope is lost.
I used to make them all the time at Cramer Berkowitz, usually in options. But when the stocks were this low, I did it in common.
I'm confident that of the five I am buying, two will go out of business, one will be bought and one will go up slightly. But another one will prosper and even win, and I will have made a great investment. It is impossible to tell right now which one is which; that's why I am making it a field bet.
All hope is lost. It's time to buy.
Can we help??
Fiber Optics: Beware of Buffett's Bet
Lots of investors are heartened by his investment in network operator Level 3. Chances are they'll be highly disappointed
Warren Buffett is, to say the least, a pretty savvy investor. So when the Sage of Omaha's company, Berkshire Hathaway, recently invested $100 million in notes of fiber-optic network operator Level 3 Communications, it was a big deal to some money managers.
Level 3 announced that it would use the funds, part of a $500 million financing package, to consolidate the industry by buying up troubled rivals for pennies on the dollar. Many investors took the move to mean that some fiber-optic cable operators finally might be a buy again after two depressed years in the industry.
However, investors should think twice before following Buffett's lead. So far, the scenario he envisions for the fiber-optics business doesn't seem to be playing out on a large scale. Instead of selling out to stronger rivals like Level 3, even deeply troubled companies still hope to make it on their own.
FRESH STARTS? In some cases, they're going through Chapter 11 reorganizations that will substantially reduce their debt. But when they come out of bankruptcy, most of them will be forced to go right back to the fierce price-slashing that got them in trouble in the first place. So, it seems unlikely that the industry will stabilize, as Buffett expects, anytime soon.
The latest example is Williams Communications, which filed for Chapter 11 in April and recently rejected Level 3's bid to buy its assets. Instead, Williams hopes to get a fresh start at its Sept. 25 bankruptcy court hearing. All told, 15 fiber-optic network operators that entered Chapter 11 in the past 18 months could emerge this fall.
These rebirths spell trouble for the industry because the operators' business models haven't changed, says Andrei Jezierski, a founder of Internet infrastructure consultancy i2 Partners in New York. That means prices, which already are falling by 50% annually, will come under even greater pressure as competition heats up.
"HORRIBLE" MARKET. Jezierski predicts that most of the revived companies will be forced out of business within a year after coming out of bankruptcy. In the meantime, the industry's suffering will continue.
The bankrupt companies' attempts to hold on are understandable. At this point, their assets will fetch a penny or two on the dollar if they sell out to rivals like Level 3. "The market for assets right now is horrible," says Sean Mitchell, manager of special risks at Canada's Export Development Corp. bank in Ottawa, which sunk nearly $100 million in 360networks, a Vancouver-based company that owns 24,500 miles of intercity fiber optic networks.
Creditors hope to ride out the slump by keeping troubled network operators like 360networks alive at least until the market improves. The company then may be able to generate enough revenues to pay off its debt, Mitchell says. 360networks' bankruptcy court hearings are scheduled for Aug. 27 in Canada and Sept. 24 in the U.S. Even if the business fails within a year, "the market is going to change, and demand for assets might come back," Mitchell says.
COMMODITY OFFERINGS. Such hopes may turn out to be pipe dreams, says Melanie Swan, an analyst with telecom consultancy RHK. For most service providers, building a new network at today's prices and using today's more efficient technology would cost, perhaps, only a quarter of getting an old network up to speed, she estimates.
The other problem is that the fiber operators mainly plan on offering the same commodity service they did before: transporting data along their networks. Some companies, such as Metromedia Fiber Network, which have built up extensive inner-city networks, also try to offer services, such as helping corporations secure their data flows. But it's unclear how much demand there is for such offerings.
In any case, most of the network providers will be badly strapped for cash after emerging from Chapter 11. Marketing budgets will have to be savaged. And most of the companies probably will be unable to afford the tens of thousands of dollars in infrastructure investment required to sign up each new corporate customer.
Metromedia, for one, has been asking new users to pay for the cost of network additions out of their own pockets, but that's hardly a way to quickly ramp up revenues. After all, with their budgets squeezed, many corporations can't afford such a major lump-sum investment.
LOWER DEBT BURDENS. Of course, reorganization should help troubled companies cut their costs. For instance, 360networks's annual interest payments should fall from about $300 million to $20 million, estimates company Treasurer Chris Muller. If it reappears from bankruptcy, Williams' debt -- which stood at $5.91 billion at the end of last year -- will be largely wiped out.
By contrast, Level 3 avoided bankruptcy but still had $5.94 billion in long-term debt as of midyear. The staffing costs of companies going through Chapter 11 will also be way down. 360networks has pared its workforce from 1,900 to just 430.
Another company that has benefited from reorganizing is privately held Ethernet provider Yipes Communications, which entered Chapter 11 reorganization in March. Its cash burn rate is now just 20% of its prebankruptcy levels, reports CEO Dennis Muse. Now, Yipes believes it has enough funds to get to break-even, and it should be generating a positive cash flow within about 20 months, says Muse.
ANOTHER STRATEGY. Some see bankruptcy filings giving a few companies a competitive advantage. "People are using Chapter 11 as part of the business process," says industry veteran Danny Bottoms, who has built networks for everyone from Global Crossing, which filed for Chapter 11 in January, to Level 3 and Qwest.
By contrast, Bottoms' latest company, privately held OnFiber, where he is CEO, has been revamping its operations for the past 18 months without resorting to bankruptcy. It's trying to grow its way out of its problems: Revenues are up 400% since January, half of that through acquisitions of small, distressed telecom players.
Level 3 would like to do something similar on a much larger scale. But most of the rivals it might want to acquire have opted for reorganization and going it alone, instead.
BETTER DEAL. If Level 3 has to wait a year or two before going on an acquisition binge, it won't bother Buffett. As usual, he has hedged his bets. He can keep close tabs on his investment through his tight ties with Level 3 Chairman Walter Scott Jr., who sits on the board of Berkshire, where Buffett is CEO.
And Berkshire will receive annual interest of 9% on Level 3's convertible subordinated notes due in 2012. That's a nice return considering today's low interest rates. At the option of the holder, the notes can be converted into common stock for $3.41 a share. The stock is trading at $5.57 today.
But most investors would be unlikely to get such a good deal. So, following Buffett's example by investing in fiber optics players would be unwise, says Jezierski. Many of those going through reorganization may not make it. In the meantime, they'll be a drag on the whole industry -- and no one can be sure for exactly how long.
NEWS ALERT
New Visual Readies Surfing Documentary, Step Into Liquid
8/22/2002 6:01:00 AM CBS MARKET WATCH RELEASE
Makers of The Endless Summer Offer a New Look at the World of Surfing
SAN DIEGO, Aug 22, 2002 /PRNewswire via COMTEX/ -- NV Entertainment, Inc., a subsidiary of New Visual Corporation (NVEI) today announced that Step into Liquid is being currently prepared for worldwide distribution. To view a trailer, visit http://www.stepintoliquid.com .
CBS MARKETWATCH TOP NEWS
Techs, airlines propel U.S. stocks
Stocks level off after upbeat finish
Fed presidents upbeat on economy, hint at no rate cut
Enron guilty plea: Officials move to prosecute others
Step Into Liquid was directed, written, and edited by Dana Brown, son of legendary filmmaker Bruce Brown, creator of The Endless Summer and Endless Summer II. Bruce Brown was a creative consultant and a co-executive producer of Step Into Liquid.
The film is a collection of stories about people who live for surfing. Step Into Liquid features over 50 real surfers from around the globe: men and women, young and old, famous and soon-to-be famous. The film also features long-board legends, short-board pros, aerial maneuvers, hydro-foiling, and supertanker surfing.
The documentary contains the first look ever at surfing the Cortez Bank, which is 100 miles off the coast of San Diego and features sixty-plus foot waves. Reflecting the global nature of surfing, Step Into Liquid tells tales from twenty different locations.
"We set out to make a film for this generation of surfers that would capture the same spirit and energy of The Endless Summer," said Dana Brown. "The original film humanized the sport of surfing by enabling viewers to connect with the surfer themselves. We used the same philosophy in the new film -- Step Into Liquid contains no stuntmen, no actors, and definitely no stereotypes. The result is an objective, unique and personal look at the world of surfing."
Ray Willenberg, Jr., president of NV Entertainment, Inc., and co-executive producer said, "We feel the rich cinematography and quality production, combined with the growing worldwide interest in surfing, gives Step Into Liquid a rare market opportunity."
About NV Entertainment
Based in San Diego, NV Entertainment, Inc. is a subsidiary of New Visual Corporation, a late-development-stage fabless communications semiconductor company. For more information, visit www.newvisual.com. The company owns 50 percent of Top Secret Productions, LLC, the maker of Step Into Liquid. For more information, visit http://www.stepintoliquid.com.
About Top Secret Productions
Top Secret Productions, LLC produced Step Into Liquid. Bruce Brown, Dana Brown and John-Paul Beeghly are associated with Top Secret Productions.
Dana Brown has directed, edited, and written over 35 projects, including Search for Surf, The Endless Summer II, 24 episodes of the Emmy-winning Surfers Journal, Red Water, The Endless Summer Revisited, and On Any Sunday Revisited.
Producer and director of photography John-Paul Beeghly has more than 80 film credits, including Discoverers IMAX, the Oscar-nominated The Living Sea IMAX and Amazon IMAX, Zion IMAX, The Fan, Seven, The Game, Hard Rain, Waterworld, Lethal Weapon 3 and 4, and many commercial campaigns.
CONTACT: Ray Willenberg, Jr. of New Visual Corporation, +1-619-692-0333, or info@newvisual.com; or Matthew Quint of Quint Public Relations, +1-650-599-9450, or mquint@quintpr.cpm, for NV Entertainment, Inc.URL: http://www.stepintoliquid.com http://www.prnewswire.com" target="_new">http://www.newvisual.comhttp://www.prnewswire.com
Copyright (C) 2002 PR Newswire. All rights reserved.
Mayu & Tigerannie, it has been along time since a flick has been so heavely promoted on TV. Generally speaking, why spend promotional $$'s that drain the bottom line returns "if" the movie was a box office success. You would not waste the revenue income on ads unless you were fairly sure that is the only way to get seats filled. Nevertheless the flick had nothing except a big cost. I for one will take our low budget high quality documentary over 90210 stuff anyday. Our percentage profits will far exceed Blue Crush..
Important to read although not currently relavant imho bit since were BB related we may be tagged..imho
17 Aug 2002, 07:48 AM EDT Msg. 85591 of 85595
Sting Operation Could Be Tip of Iceberg
by Toni Clarke
Friday, August 16, 2002 9:10 p.m. EDT
NEW YORK (Reuters)
A two-year federal sting operation led to a mass indictment this week of 58 stockbrokers and corporate executives on charges of stock fraud and money-laundering.
It's just the tip of the iceberg, lawyers say.
One of the most prominent figures caught in what investigators call the " Bermuda Short" operation was Mark Valentine, the suspended chairman of Canadian brokerage Thomson Kernaghan & Co. Ltd., according to FBI officials.
The arrest of Valentine, who was detained in Frankfurt on Wednesday, could help unravel other stock manipulation schemes, say lawyers for companies that claim to have been victimized.
Valentine's lawyer, Joe Groia, was not immediately available for comment on Friday.
In federal indictments unsealed on Thursday, investigators claim that Valentine and a Bermuda-based financial firm conspired to manipulate the shares of three companies -- JagNotes.Com, Softsquad Software Ltd. and C Me Run Corp. Kernaghan was not immediately available for comment.
Valentine's company is one of dozens of brokerages -- many based offshore -- that have stripped or ruined small U.S. companies in fraudulent funding schemes, possibly helped by venerable Wall Street firms, according to lawyers of the affected companies.
"Our mission is to find the real beneficial owners behind these offshore companies, to find the banks behind them and the brokers through which they trade," said James W. Christian, a Houston lawyer representing a growing number of companies that claim to have been hurt in the schemes.
Christian is partnering with John O'Quinn, the Houston attorney who won $$Billions of dollars for clients in breast implant and tobacco suits.
The frauds allegedly center around a funding mechanism known as "death spiral financing" in which an investor or group of investors approach a company with limited access to cash and offer to invest in return for convertible preferred debt.
Unlike typical convertibles, which convert into a specific number of common shares, the death spiral preferred debt converts into a set dollar amount of common stock. If the price of the common stock declines, the convertible holder is entitled to more shares.
The victimized companies see their stock plummet right after the investment, as the convertible holders begin short-selling the common stock, the plaintiffs say.
Short sellers sell borrowed stock on the bet the price will fall. If it does, they buy back the stock at the cheaper price and pocket the difference.
As the stock of the target company plummets, the unscrupulous investors convert their preferred debt into common shares, diluting the value of existing shareholders almost out of existence, the plaintiffs' lawyers say.
A wide range of Wall Street firms sold shares they could not deliver on behalf of such investors, the plaintiffs' lawyers say.
Short-selling in itself isn't illegal. But it is illegal if the certificates are never delivered, or if there is no intention to cover the sales -- something known as "naked" short selling.
That, plaintiffs say, is exactly what happened.
"In our opinion, the brokers are going to get slaughtered," said Christian. "We've identified 50 that make sizable money from it. The same guys are doing this every day."
Thomson Kernaghan is one of dozens of brokerages that are named in civil suits filed by O'Quinn's group. The group has filed lawsuits on behalf of five companies, most of which trade on the over-the-counter Bulletin board and it's preparing to file another seven, Christian said.
JagNotes, subsequently renamed Jag Media Holdings Inc., is one of the companies O'Quinn's group is representing in a civil suit. Among the defendants named in the Jag suit are well-known Wall Street firms like
Banc of America Securities,
Bear Stearns Cos. and
CIBC World Markets Inc, as well as dozens of others.
Representatives from Bear Stearns, CIBC and Banc of America Securities were not available for comment.
The practice of naked short selling became evident when Jag began issuing a new class of shares to stockholders in return for their old certificates, plaintiffs lawyers say.
More shares had been sold than could be accounted for by the number of certificates held.
"Many brokerage houses have large gaps in their beneficial holder lists," the Jag complaint alleges. "In many instances there is no certificate to match many trades held by brokerage firms and back office people who are settling the trades."
John Finnerty, principal at Analysis Group Economics, a consulting firm that has been analyzing the trading into some of the victimized companies, said it is clear that short selling accounted for a large part of the decline in the targeted companies' shares, though it is unclear who was behind the selling.
"We could not identify any fundamental or market related reasons that would account for the stocks being driven down as much and as fast as they were," Finnerty said.
A lawsuit filed by O'Quinn on behalf of Internet Law Library, now called ITIS, lists numerous companies whose shares declined precipitously after being touched by Kernaghan and others.
According to Christian, hundreds of companies have been hurt by groups with very similar modus operandi.
An examination of filings made with the Securities and Exchange Commission indicate that the same group of names -- often investment entities based offshore -- come up time and again in connection with companies that, having accepted money from these groups, see their stock plunge to near-zero.
Desperate start-up companies, often without much business savvy, are eager to believe the groups' pitch.
The investors often request warrants to buy shares at a higher price, implying they have an interest in seeing the company succeed. But the warrants are almost never exercised because the stock price heads south after the ink is dry on the financing.
"The most compelling fact in all these cases is the repetitive pattern of abuse by these companies," Christian said. "Everyone who goes into operating room No. 1 dies.
That's what will get us punitive damages."
http://news.lycos.com/news/story.asp?section=MyLycos&pitem=B...
Maybe this is happening to NVEI?
Richard Ney on the Role of the Specialist
by Michael Templain, a fellow Bender
Fred Jacquot, the big Bender, le Gros Ventre as it were, has asked me to provide a better, if somewhat longer, explanation of the writings of Richard Ney; a task I am happy to perform.
"The story is told that after he had been deported to Italy, Lucky Luciano granted an interview in which he described a visit to the floor of the New York Stock Exchange. When the operations of floor specialists had been explained to him, he said, 'A terrible thing happened. I realized I'd joined the wrong mob'" (1Ney, 8).
It was with these words that Richard Ney began his first of three books on the nature of the New York Stock Exchange. Ney wrote over 20 years ago, a time when a 750 Dow was high and today's volumes were beyond imagining. Some of his material is dated, and must be read in the light in which it was written. But the main premise of his books is still true: that the specialist exists not to ensure the free and orderly trade of stock in a particular company, but to fatten upon the innocence and ignorance of the small investor.
The New York Stock Exchange is not an auction market (2Ney, 86), though many investors still hold onto that image. It is a rigged market. Volume is an effect of price. Prices are controlled absolutely by the specialists, the 'market makers' in individual stocks. It was this discovery that led Mr. Ney to eventually give us small investors a priceless gift: enlightenment.
"Studying the transactions in each stock, I became immediately conscious that, on too many occasion to be a coincidence, a stock would advance from its morning low and then, often during the afternoon, would show an up-tick of a half-point or more on a large block of anywhere from 1,500 to 5,000 or more shares. This transaction seemed to herald a transformation in what was taking place, for immediately thereafter the stock would begin to drop like Newton's apple. Before I could find out what caused this, another question presented itself: What caused the same thing to happen at the low point in that stock's decline? For it was also apparent that a block of stock of the same size often appeared on a down-tick of a half-point or more, after which the stock quickly rallied. Together these two facts seemed to give a stock's pattern continuity. At the end of several days of investigation, I discovered that these transactions at the top and bottom of a stock's price pattern were for the specialist's own account. ... Clod that I was, I had at last recognized that, although the study of human nature may not be fashionable among economists, it is never out of season" (2Ney, 9).
The specialist is part of a system. First, he is part of that rare fraternity of men who are all specialists in an exchange. It is a small private club, to whose membership one can only be born. The specialists of the Dow 30 exhibit the spirit of 'all for one, and one for all'. If one of the 30 is having problems, the other 29 wait for him, before they move onto their next agreed upon campaign (2Ney, 172). The rest of the specialists take their lead from watching the Dow 30.
But the system is more extensive and more powerful than just the specialists. The specialists are the heart of the exchange. The exchange, in turn, has practical control of the major corporations, banks, insurance companies, and brokerage houses in this country. These, in turn, influence news reporting and the regulatory agencies.
ADVANTAGES OF BEING A SPECIALIST
The specialist has many advantages, many tools to use to pry dollars from unsuspecting investors and mutual funds. Chief among these advantages is his book. In his book he can see at a glance all the buy and sell orders from the public and the funds. His book tells him of potentially massive sales above and below his current price. This gives him a great advantage when he is trading on his own investment and omnibus accounts.
Because of his book, the specialist sees shifts in trends long before anyone else. This gives him a great advantage. The specialist will buy heavily at the bottom of a slide (at wholesale) then advance prices and sell, at heavy volume, at the peak of the rally (retail). He will then sell short and take prices down. The turning points of a rally will be marked by heavly volume in the Dow 30 (3Ney, 85-89).
When he desires he can even make large block trades without entering them into his book. In this way the public is never made aware of those trades. Should the specialist want to supply a buy or sell order from his own accounts, rather than from public orders on book, he can and will do so (1Ney, 156). Ney cites specific examples when his customers orders were ignored while the specialist completed orders for his own accounts.
When serving as the market maker, the broker's broker, the specialist trades from his Trading Account, which is to be used to service the needs of the market. However, he also has Investment Accounts (plural). His Segregated Investment Accounts put him directly into competition with every other investor in his stock. The reason for he has segregated investment accounts is that they enable him to convert regular income into long-term capital gains (1Ney, 113).
In addition, he also trades on Omnibus accounts, taking orders from a friendly bank on behalf of friends, family, and himself (1Ney, 58). Although he is not allowed to be both long and short in his Trading account, he can take the opposite stance in his Investment or Omnibus accounts (3Ney, 130).
A Specialist will often not have any shares in his trading or omnibus accounts. If public demand for shares suddenly increases, the Specialist is more than happy to supply those shares to the public by short selling. This, of course, forces the Specialist to take the price down soon thereafter, so that he may cover his short sales at the lower price. Or, the Specialist may sell from his Investment Accounts, establishing a middle or long term high (1Ney, 61), and then take the price down. Whichever strategy he employs, a large public demand for stock ultimately drives the price of that stock down, not up.
Distribution of large amounts of stock can be done from the specialist's trading account, usually as short sales. The trading account can then be covered by transferring stock from the long-term investment accounts into the trading account (1Ney, 64).
The existence of the specialist's Investment and Omnibus Accounts is ultimately detrimental to the public. "In a stock with only a small capitalization or floating supply, the segregation of large blocks into long-term investment accounts for the specialist further decreases the supply of the stock available to the public" (1Ney, 61)
The specialist has absolute control over price. He can match the buys with the sells in any way he sees fit. He can raise the price of the stock 3 points in three trades, and open the next day down 5.
The seeming unpredictability of stock prices is due to the fact that prices exist at the whim of the specialist. A stock is only worth what the specialist is willing to pay for it at the moment. The fluctuations you see are, in fact, the evidence of how the specialist is working out his inventory problems to meet his short-term, intermediate-term, and long-term goals (2Ney, 172). The specialist will sometimes 'leap frog' his prices up or down, creating a gap. This is done to keep a group of investors from buying or selling at a particular price. 'Leap Frogs' show specialist intent.
Ney offers specific examples where specialists opened stocks considerably lower:
August 8, 1967 Chicago and Northwestern Railroad opened down 39 points.
October 21, 1968 one of the preferred stocks of TRW opened down 28 points.
February 4, 1970 Memorex opened down 29 1/2 points (1Ney, 15)
(FOR RECENT EVIDENCE OF SPECIALIST CONTROL OF PRICES CLICK HERE.)
"With $8,000, you can buy $10,000 worth of stock, but with $8,000 in stock, any Stock Exchange member can buy $160,000 worth of stock for his own segregated investment account" (1Ney, 112).
Because most investors have margin accounts, and the margin account agreement allows their brokers to lend their shares, specialists have an unlimited number of shares to borrow and sell short (1Ney, 68).
Margin agreements also allow the broker to use their customer's shares as collateral without the customer's knowledge or permission. This practice is fraught with dangers. In November, 1963, the Ira Haupt brokerage firm (NYSE), which dealt in both stocks and commodities was caught unwittingly in a scheme by one of its commodities customers to leverage nonexistent salad oil. The failure wiped out the partners of the firm and left it owing some $37 million in debts. "To compound Haupt's and the New York Stock Exchange's problems, it was impossible to return the stock to customers because the stock (held by the brokerage firm for its customers) had been pledged to banks by Haupt" (1Ney, 122).
Margin accounts usually allow the broker to borrow any cash in the account to use for his own purposes at no interest, even to lend back to the customer for margin purchases, at interest (1Ney, 119).
At the bottom of a cycle of a stock, having panicked customers into selling, the brokers and specialist borrow the customers' money to make their own long-term purchases; using their advantageous margin to acquire large amounts of stock. At the top of the cycle the process is reversed. Customers are paid back their money by the brokers and the specialist selling their shares to customers at a profit. The insiders even have extra cash to loan customers for margin purchases (1Ney, 136).
Another powerful tool for the specialist is the short sale. Though the specialist is responsible for 85 percent of the short selling done in a stock, the Exchanges are loathe to print any timely data on specialist short sales (2Ney, 94)(3Ney, 234). The specialist uses the short sale to control both downward and upward movements of stock (3Ney, 88).
The private investor or mutual fund can only sell short on an up- tick. The up-tick rules serves only to trap the public into selling short at the bottom, as the specialist drives the price down without a single up-tick for the public's use (1Ney, 72). But the specialist need not even create an up-tick to sell short. The SEC has been careful not to publicize its rule 10a-1(d), in which sub-paragraphs (1) through (9) exempt the specialist from the up-tick rule (2Ney, 97)(3Ney, 126, 215).
The Securities Exchange Act of 1934 prohibits pegging, the act of artificially holding a stock's price at a certain level for the advantage of the person or persons doing the pegging. However, SEC rule X-9A6 (1940) allows pegging by specialists in order to 'maintain an orderly market' while a large-block distribution of shares is taking place (2Ney, 117).
THE CORPORATION, THE SPECIALIST, AND THE EXCHANGE
The specialists and brokers hold shares "in street name" for investors, and therefore can vote the proxies for those shares. Officers in a corporation must report to the SEC any trading they do in the shares of their own company. Yet the Specialist reports his profits in trading the shares in that same corporation to no one (1Ney, 54-55).
The specialist, one of his partners, a friendly broker, their lawyers, or their bankers, often sit on the company's board of directors, which makes the specialist privy to information before the average trader. Where an officer of a corporation is held strictly accountable to the SEC for his use of 'inside information', the specialist and fellow brokers are accountable to no one (1Ney, 54-55).
"It is an ideal situation. When you control a corporation's proxies, everyone is sympathetic to your point of view and your choice of directors. This is the other reason why nearly every major corporation listed with the Exchange (NYSE, M.T.) has a broker or a broker's banker on its board. It gives the exchange a pipeline to that corporation" (1Ney, 90).
Large brokerage houses, large banks, and the New York Stock exchange use dummy corporations as fronts to hold large portions of stocks in corporations. A list from any large corporation of its largest stockholders will be a roll of these very dummy corporations, who show up on list after list of major stock holders in America's largest corporations (2Ney, 19-23).
The intertwining of interests runs even deeper when the relations of Wall Steet's top Law firms are examined. For example, in 1974 the New York Stock Exchange's legal counsel also represented Chase Manhattan Bank. Both entities, through their dummy corporations, were large stockholders in scores of major U.S. corporations (2Ney, 26).
THE EXCHANGE, THE SEC, THE FEDERAL RESERVE, AND THE WHITE HOUSE
"The bankers' man, Senator Carter Glass, who steered the Federal Reserve Act through Congress in 1913, had maintained that the Federal Reserve banks would be merely 'lenders of money.' The only collateral they were to accept was notes that could be paid when, in the course of business, goods and services had been manufactured and distributed. However, almost from the day of its inception, the Federal Reserve System set about making loans on common stocks" (1Ney, 103).
Who sits on the Federal Reserve Board? ... Chief officers of banks and corporations, all of whose companies are controlled by the Exchange (1Ney, 103-105).
Billions, perhaps trillions of dollars worth of stocks are now held by banks as collateral for loans. This too works to the advantage of the specialists. For, to protect their interests, banks will issue stop orders to sell the stock before it falls below a certain price. The specialist holds those stop orders in his book and therefore knows exactly where a large number of shares can be had, and at what price they can be purchased. One quick sweep down those ranges of prices will deliver to the specialist the inventory he desires for short and mid-term purposes (1Ney, 101).
On June 30, 1934 President Roosevelt appointed Joseph Kennedy to be the first Chairman of the SEC. Only 4 months before, Kennedy, along with Mason Day, Harry Sinclair, Elisha Walker, and others were found to be responsible for operating 'pools' that were actively manipulating stock. When these, "poolsters withdrew and the boom collapsed the administration denounced the men who operated them" (1Ney, 215). But what's a little denouncement between friends?
The stock markets had been headed downhill since December of 1968. On May 26, 1969 a party was held at the Nixon White House. In attendance were John Mitchell, Maurice Stans, Peter Flannigan, thirty five guests from Wall Street, fourteen industrialists, seven bankers, five heads of mutual and pension funds, and two heads of insurance companies. The next day a bull rally began on Wall Street. May 27th saw the Dow Jones 30 average rise by 5 per cent in one day (2Ney, 71).
On April 17, 1971, President Nixon, who along with Attorney General Mitchell had been a Wall Street lawyer (Maurice Stans was a broker), appeared for photographs with friends from the New York Stock Exchange. Nixon recommended the public to invest in the market. By April 28th the market was in a steep decline. Nixon circulated, "to 1,300 editors, editorial writers, broadcast news directors, and Washington bureau chiefs a list of the stocks of ten corporations that had advanced during the past year" (2Ney, 32).
There is a revolving door between the exchange and Washington. SEC Chairmen 'retire' to go to work for the Exchanges or major brokerage houses at many times their government salaries (2Ney, 50-63). SEC Chairman Hamer Budge was found by Senator Proxmire's investigation to be making frequent trips to Minneapolis to confer with officials of IDS. IDS was under investigation at the time by the SEC. After leaving the SEC, Budge took the position of Chairman of the Board with IDS (2Ney, 56).
NEWS AND FINANCIAL REPORTING
It is highly unlikely that we will see news reports critical of U.S. stock exchanges, or of the specialist system. There is a simple reason for this. All news organiztions are corporations and do but reflect their management's views. Corporations that own media have specialists influencing the choice of management. Newspapers, magazines, and television are but extensions of the corporate world.
When Richard Ney's first book, The Wall Street Jungle, came out it was on the New York Times best seller list for 11 months. Yet the New York Times would not review it. The Wall Street Journal refused to take an ad from a New York bookstore that featured The Wall Street Jungle (2Ney, 30).
All three of the major networks were wary of having Ney appear. NBC banned only two people from appearing on the Tonight show with Johnny Carson: Ralph Nader and Richard Ney. Not only do large banks, brokerage firms, and corporations advertise on television, they also are the largest stock holders (2Ney, 33- 34).
SPECIALIST STRATEGY
The specialist should be thought of as a merchant with some rather unique inventory problems and opportunities. His goal, always, is to buy at wholesale prices and to sell at retail. This applies to his actions in the course of trading day as well as a year of trading.
At the bottom of a slide the specialist will buy heavily for his trading, investment, and omnibus accounts. His goal then becomes to raise the price of his stock with his wholesale inventory intact. In practice, though, he may have to sell shares to meet public demand. This will cause him, then, to lower the price to re-accumulate his inventory before he can proceed to higher levels.
A rally begins while the price of the average stock is still falling. "Major rallies begin and end with the unexpected," (3Ney, 184).
To stimulate public demand for his stock, near the high the specialist will raise the angle of the rising prices dramatically for the stock. True to one of Ney's axioms that prices beget volume, the public will rush into the market place at the rally high. The specialist can now sell his accumulated inventory to fill the increased demand. Heavy Dow 30 volume at the high is evidence of heavy short sales by the specialists (3Ney, 113).
When the specialist has sold all his inventory, and has sold short, he will then begin a downward slide of prices so necessary to his plans. Slides are a mirror of rallies. Near the bottom, the specialist will increase the angle of price decline, alarming investors, scaring them into selling their shares to the specialist who needs them to cover his short sales, and to build a new inventory at wholesale. The media will remain bullish, or cautiously optimistic throughout a slide, until the last two weeks, when they will turn suddenly bearish (3Ney, 158).
TIPS FROM RICHARD NEY:
Specialists in the most active stocks will require more time than their fellow specialists to move stocks up or down, or to cover at the top of a rally or the bottom of a slide (2Ney, 84-85).
Specialists may use a rally as a 'stalking horse' for a later rally. Price is used like a geiger counter to locate volume (3Ney, 149).
During the typical bear market, or slide, the specialists will usually bring prices up on Fridays, to keep investors hopes alive (2Ney, 92).
Leaders of the rally in the Dow 30 will often act as 'screens' for the price declines of the other 24 or 25 Dow stocks.
Each stock exhibits its own distinct pattern or rhythm of price behavior (2Ney, 189).
THINGS OF WHICH TO BE AWARE
How can you spot the nadir of each high and low? Ney says to look at volume very closely. In particular look at the volume of the individual Dow 30 Industrial stocks (2Ney, 171). Get to know these specialists' habits. Follow what they do. Patterns of behavior will emerge.
Ney emphasized that a sense of timing was critical for survival in the market (2Ney, 149).
Ney was convinced that detecting Specialist short selling was a key. Specialist short selling at the peak of a rally should be detectable through increased volume.
Richard Ney used charts extensively. Ney was quick to point out that what is really being measured in his charts is not the behavior of the masses in the marketplace, but the techniques of the specialist in an individual stock as he maneuvers to solve short-term, intermediate-term, and long-term inventory problems (1NEY, 259).
Ney points to the gaps in prices that develop when a specialist is trying to 'catch up' with the market. These gaps, be they up or down, signal specialist intent (2Ney, 172).
"Investors assume that what happens in the economy or to the corporation in terms of earnings or sales determines the trend of stock prices. ... The most misleading element in this type of analysis is that it ignores the basic needs and motivations of the specialist system" (2Ney, 150).
We, as consumers react to certain critical numbers. Specialists know this. Specialists use the 10's (10, 20, 30, etc.) and 5's (5, 15, 25, etc.) in their strategies. They will use these numbers to elicit heavier buying or selling from the public. Often too, though, they will avoid critical numbers to avoid buying or selling stock when they do not wish to do so (2Ney, 155-156 & 163).
NEY'S SMALL INVESTOR TRADING RECCOMENDATIONS (1Ney, 297-301)
1. Do not buy the acknowledged leader in a field. Buy the number 2 or 3 company. These companies are more likely to be subject to bull raids by the specialists (1Ney, 298).*
2. "Nothing puzzles me more than an investor's willingness to pay more than fifty dollars a share for stocks. Buy low priced stocks. It's percentages you're after and you'll get them in these stocks in a bull market" (1Ney, 298).*
3. Invest only in stocks listed on the NYSE. *
4. Do not buy secondary offerings from your broker.
5. Buy only stocks whose prices have fallen at least 35 to 50 percent.
6. "The rule, 'Cut your losses and let your profits ride,' was invented by a broker" (1Ney, 298).
7. The average investor need not worry about tax brackets, so do not hesitate to sell at a profit. "A short-term gain is better than a long-term loss" (1Ney, 299).
8. Own your stock. Do not use margin. *
9. Do not sell short. *
10. Do not allow your stock to be borrowed (via a margin account; M.T.) *
11. Credit balances should be immediately transferred to your bank. *
12. Do not leave your stock with your broker in street name.
13. Invest only in growth oriented, not income, stocks.
14. 4 to 5 stocks in a portfolio is plenty.
15. Make arrangements with your bank to receive your stock.
16. If there has been a major advance from the summer lows, look for the public to begin selling 6 months hence.
17. Big block sales at the end of a run-up (usually marked by heavy volume) marks the imminent decline in price.
18. Look for bull raids in May, up from the April 15th tax low.
19. Never enter stop or limit orders. *
20. If you are interested in a stock, learn its specialist's habits.
21. Stocks that are ideal for bull raids are those that decline as close as possible to an angle of 45 degrees.
* These are items with which we Benders disagree, or feel that need modification or explanation. Please see THE BENDER'S BLEND at this site, when it has been revised (M.T.).
Works Cited:
1Ney, Richard. THE WALL STREET JUNGLE, fifth printing. New York: Grove Press, Inc., 1970.
2Ney, Richard. THE WALL STREET GANG, third printing. New York: Praeger Publishers, Inc., 1974.
3Ney, Richard. MAKING IT IN THE MARKET. New York: McGraw-Hill, 1975.
Greed and fear, while equally powerful emotions, are asymmetrical in the way they influence market behavior.
Greed develops and festers slowly, over many months or years, as one investor at a time gradually realizes that someone out there is getting rich in the markets so he or she decides that there is no reason why they can’t do the same.
Greed takes a long time to wax ecstatic and come to a boiling point among a large population of investors.
Fear, on the other hand, often strikes the whole herd of investors at once out of the blue like a bolt of lightning.
Some unforeseen bad news explodes onto the scene, or prices drop rapidly, and, like a flock of sheep, the chilling specter of fear leads to sudden mass selling movements.
There is not often a long gestation period for naked fear, it can rear up rather quickly.
It is this dark fear welling up deep within investors’ and speculators’ hearts that leads to volatility extremes, huge spikes in volatility accurately flagging interim selling climaxes.
From Business Week today.
Another Crop of Sleazy CEOs?
Here's a warning for Corporate America: Adelphia's John Rigas, ImClone's Samuel Waksal, and Tyco's (TYC ) Dennis Kozlowski may be just the beginning.
Executive-search firm Russell Reynolds, along with personality-testing firm Hogan Assessment Systems, conducted psychological profiles of more than 1,400 managers at large U.S. companies. Dean Stamoulis, an executive director at Russell Reynolds and an organizational psychologist, gave the execs 28 true-or-false questions on rule compliance and interactions with others to gauge their level of integrity.
The troubling results: One out of eight execs can be termed "high-risk." That makes them far more likely to break rules than the remaining 87%. "These are folks who believe the rules do not apply to them," says Stamoulis. "They're extreme in their lack of concern for others. They rarely possess feelings of guilt."
When he gave the same test to another group, he found more than 60% of them to be at high-risk for rule-breaking. Who were they? Inmates at a maximum-security prison.
By Louis Lavelle
Certainly hope not or some possible toast in the oven may get burned.
Well, if one did it they all did imho. Perfect time for NVEI to announce will be after the massive down draft to come in VZ SBC and BLS stock. I will take any of the three leaders in a buyout with paper. jmho
More Backpedaling From Qwest
By Cody Willard
Special to TheStreet.com
08/09/2002 03:24 PM EDT
Qwest (Q:NYSE - news - commentary - research - analysis) just can't seem to get things going in the right direction. By just about any metric, its second quarter was a disaster. Frankly, I was shocked by how bad the numbers were, including its $1 billion loss.
The remarkable disconnect between Thursday's reported numbers vs. those from previous quarters is probably yet another indicator of how badly the company was inflating its numbers in the past, as the company has recently announced that it will have to restate results for 2000 and 2001.
Such facts are rather obvious in its press release Thursday. The company even stated that "reported revenue for the quarter decreased 17.3% to $4.32 billion from $5.22 billion in the same period last year, primarily due to the absence of optical capacity asset sales and certain Internet Protocol (IP) equipment sales."
As readers of my newsletter have known for a long time, Qwest will probably have to come clean and admit that many of those optical capacity swaps and, more problematically, those IP equipment sales were wrongly accounted for. While I think the market has likely dealt with the capacity swaps, aggressive accounting of equipment exchanges may roil investor confidence in telecom once again.
Some of my industry sources say that companies ranging from IBM (IBM:NYSE - news - commentary - research - analysis) to Sonus (SONS:Nasdaq - news - commentary - research - analysis) to BellSouth (BLS:NYSE - news - commentary - research - analysis) will be implicated in the capacity, equipment and/or services swaps.
Any hint of participation in such transactions would probably be enough to slam a company's stock. If the revelations touch BellSouth, expect a sympathy decline for Verizon and SBC
When Qwest finally gets around to officially restating its numbers for 2000 and 2001, I think we can expect some WorldCom-type numbers -- perhaps several billion dollars in questionable reported revenue. It sure must have been nice to blow out of a quarter billion dollars worth of stock on the back of those numbers, like former CEO and "visionary" Joe Nacchio did. Maybe he'll lead a syndicate to buy Qwest out of bankruptcy. That would be poetic, no?
One of the beautiful things about telecom service providers is the fundamentally recurring revenue streams that they receive. While equipment vendors must continually hope for new network buildouts or increased demand for bandwidth or other upgrade-cycle catalysts, service providers can essentially sit back and collect a check every quarter.
To maintain steady revenue, service providers just have to keep from losing existing customers instead of constantly exerting the effort to sell new wares. Although all of the regional Bell operating companies are getting hit by recurring revenue drops and are finding it difficult to show any revenue growth, Qwest's quarter-over-quarter 6% decline will be brutal.
Qwest is a huge long shot to pull this thing off -- no matter what happens with its long-anticipated sale of the QwestDex telephone directory-publishing business or other assets.
I still think its stock might see a pop of a buck or two if the company can manage to sell QwestDex, but I'm becoming ever more convinced that the next chapter in its history will be 11.
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Cody Willard is a telecom and financial analyst/consultant. He is also founder of TelEconomics.com. Willard has co-managed $150 million in private investment funds and has headed up the research and analysis division of a venture development company. He has founded several telecom and technology companies and has managed the wholesale division of a $100 million CLEC. He also produces a premium product for TheStreet.com called The Telecom Connection. At time of publication, Willard was long SBC and Verizon, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Willard appreciates your feedback and invites you to send it to cody@teleconomics.com.
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Cash anyone. NVEI will sell out within a year for stock and green crisp bills, imho.
Tech firms swimming in cash, but what do to with it?
Reuters, 08.04.02, 2:45 PM ET By Duncan Martell
SAN FRANCISCO (Reuters) - The technology industry may be slogging through its worst slump ever but many of the biggest names aren't hurting for cash.
In fact, they're swimming in the stuff.
So the question facing companies and investors is what to do with all that money. The options, experts say, are actually rather limited -- buy another company, buy back shares, boost research and development spending or increase dividends. But the good thing in the interim is that all that cash is helping to keep their battered shares from falling even more, and could be enticing to investors.
Take Microsoft Corp., for example. The No. 1 software company is a cash-generating machine, with $38.7 billion in cash and short-term investments, more than Ford, ChevronTexaco and Wal-Mart combined.
Shareholders may soon start asking for some of it back. After all, spending on information technology has been lackluster, the stock market has sagged, and some of the biggest names in technology, such as Intel Corp., are seeing their markets mature.
"We're past the point where we have the unlimited faith of investors," says Henry Asher, president of New York-based money management firm Northstar Group, which owns Cisco, Intel, Microsoft, Oracle and other tech stocks.
In addition to Microsoft, Cisco Systems Inc., the biggest computer networking gear maker, boasts $21 billion in cash and investments, Intel has $8.96 billion and database powerhouse Oracle Corp. has $5.84 billion.
"Particularly Intel, Microsoft and perhaps Oracle will be at the head of the list to increase payouts to shareholders," Asher says.
Even though their stocks are down and earnings have been under pressure, the biggest tech firms are no slouches when it comes to generating cash from their core businesses, ranking with huge oil companies, pharmaceutical and consumer goods firms.
A PERENNIAL QUESTION
Sure, a company can also boost research and development budgets. But it is possible to spend too much.
Already, Microsoft has earmarked $5.3 billion for research and development in its fiscal year ended June 2003 -- 17 percent of its projected revenue of $32 billion. But it could easily fund that through the billion dollars a month its Windows and Office software pull in.
"I can't imagine that if you disgorged all the cash they had, that they couldn't protect the Windows franchise entirely and, probably, with the cash that rolls in, grow the company nicely," Asher says.
Technology companies could start paying dividends -- Microsoft never has -- or they could boost those dividend payouts. Intel, for instance, pays a quarterly dividend of 2 cents a share, equal to a dividend yield of 0.43 percent.
"I think it's entirely conceivable that some time in the next few years more and more stockholders are going to be saying, 'Let's get some dividends,"' says Jay Ritter, Cordell professor of finance at the University of Florida in Gainesville.
"You've got this massive cash hoard and you're no longer a growth company, let's see an effort to pay out some of that cash to investors through dividends," says Ritter.
Also, smaller companies with an unusually large sums of cash could prove a tempting takeover target, experts say.
GIVE BACK THAT GO-GO 1990s CASH
Another way to return some of that cash to shareholders is through share repurchase programs. When companies buy back shares, per-share profits are boosted because earnings are spread across fewer shares outstanding. Those buybacks have been a mainstay of equity markets since the early 1990s.
Already, tech behemoths such as Cisco, Intel and Microsoft spend tens of billions of dollars each year combined to buy back shares to offset the dilutive effect of stock options.
Indeed, some say investor pressure will start to mount on firms that banked billions in the go-go 1990s and which now see formerly rapid growth in their principal markets slowing.
Yet companies, particularly technology companies, have maintained it's wise, even in the best of times, to sit on cash, and even more so when demand falls off a cliff.
Ask John Chambers, chief executive of Cisco, which has no debt, what he's going to do with that $21 billion, and he'll invariably respond, "Cash is king."
Some investors agree.
"Cash is really a great strength because of the volatility of technology and the rapid change in the industry," says John Rutledge, portfolio manager at the Evergeen Technology Fund. He notes he's comfortable with Cisco's, Intel's and Microsoft's propensity to sit on the cash on their balance sheets.
"Having all that cash is probably one of the least of their worries right now," Rutledge says, adding that in some cases, loads of cash is enough to warrant buying shares. "There are going to be some buys here."
GO SHOPPING!
But if not more R&D spending, boosted stock buyback programs or plumped-up dividends, what else is a company to do? Go shopping, of course. Scoop up distressed competitors on the cheap and gain market share or move into new markets.
Yet that approach has problems, too, experts say.
"Sure, having cash earning 2 percent is not really enhancing shareholder value," says Ritter. "But investors also fear that if a company has got the money they might go out and waste it, and indeed that's what has happened sometimes."
Ritter points to Ford Motor Co.'s purchase of venerable British car maker Jaguar more than 10 years ago. "Ford went out and overpaid for Jaguar and the return to date on that investment has been pretty unattractive," he says.
Whatever the method, what to do with this embarrassment of riches proves to be a sticky question. "It's a real quandary where to put this money," Rutledge says.
Rather than potentially ill-advised or overpriced acquisitions, larger buybacks or wanton spending on R&D, it seems the time may be coming closer -- in the next few years -- for large tech companies to start jacking up their dividends.
"There's no doubt in my mind that if any of these companies announced they were going to start paying substantial cash dividends, that the stock market would greet the news very positively," Ritter says.
Considering that the U.S. stock market is mired in the worst bear market since the early 1970s, technology firms might be well-served to heed that advice sooner rather than later.
Copyright 2002, Reuters News Service
OPTIONS
28 Jul 2002,
The 'real' options problem The earnings hit from
expensing is only the half of it......
By Adam Lashinsky, CNN/Money Contributing Columnist
PALO ALTO, Calif. (CNN/Money) - The great stock-option
debate consumes Congress, maddens the media and irritates the
individual investor.
The salaries companies pay employees are accounted for as expenses
and detract from earnings. But employee stock options -- merely
another form of compensation -- don't.
So should stock options be treated as normal compensation and
expensed accordingly? Of course they should. That was easy. But it's
also missing the point.
Expensing stock options, as Coca-Cola and a small group of other
companies now say they will do, will lower reported earnings. That,
however, amounts to just a bookkeeping change.
Where options absolutely do matter is in their dilutive effect. To
understand what I'm talking about, consider the impact of options
first on reported earnings and then on potential dilution at two huge
companies, Coke and Microsoft.
Coke grabbed headlines for announcing it'll expense employee
options going forward, a move that would have eliminated about 5
percent of Coke's 2001 earnings. Microsoft, which merely states the
fair value of its options, but doesn't expense them, would have seen
an earnings hit of about 30 percent. (See what the expense hit would
be for other big companies.)http://money.cnn.com/2002/07/11/news/options/index.htm
Fine, but that's just a matter of accounting. The more interesting
figure is the so-called options overhang, or the potential dilution if all
a company's outstanding employee stock options were exercised and
sold. When that happens the shares outstanding increase, and all
things being equal, the value of each previously held share goes down.
And you can find this information in every company's 10-K annual
report by searching for the expression "stock options." In Coke's
case the number is puny, just 6 percent. In Microsoft's case, its
outstanding options represent 17 percent of the total shares
outstanding. (The numbers look even worse if you include shares set
aside for future options grants, an exercise Money magazine went
through for 50 of the largest companies -- you can see the results
here.)http://money.cnn.com/pf/investing/features/idealstock/option.html
Why is this such a big deal? Microsoft's market cap is $281 billion
and there are roughly 5.4 billion shares outstanding, for a price per
share on Wednesday of $52. In Microsoft's annual report from last
year, you can learn that there are 898 million stock options
outstanding. Assuming no variable changes in the business, the
addition of all those shares will make each one worth less -- just $45.
The exercise gets scarier when you stray from the top of the heap.
At Broadcom, a semiconductor maker, the ratio of options
outstanding to shares outstanding is 40 percent. At Yahoo, it's 23
percent.
According to Yahoo's 10-K, however, the average weighted value of
each option is $39.22, well above Wednesday's close of $14.26. Ah,
you must be thinking, then there's no reason to be too concerned
about dilution. Sorry. Fifty-four million of Yahoo's 137 million options
outstanding have an average weighted exercise value of less than
$13.08. That means it's a near certainty that all those shares -- 9
percent of Yahoo's total -- have been or will be exercised and added
to the share count.
So remember, it's the dilution, not the bookkeeping, that really
matters.
http://money.cnn.com/2002/07/17/commentary/bottomline/lashinsky/index.htm#
wheels.. I will confirm..Saw it in Vegas @ the trade show. eom
34Simmons
SBC Reaction to NCSL Telecom Resolution
DENVER, Jul 27, 2002 (BUSINESS WIRE) -- Following is a response by SBC Communications (NYSE:SBC) to the telecommunications resolution passed by the National Conference of State Legislatures today at their annual meeting. Please attribute to SBC President William Daley.
Consumers will be the big winners of a fair and level playing field in rolling out advanced services, like high-speed broadband technology, where all providers are treated the same. We applaud state legislative leaders for taking the initiative in helping bring the benefits of robust broadband competition to consumers.
This is a terrific, forward-looking initiative. It shows the momentum behind improving the rules governing telecommunications. Congress can act immediately on this by passing the Breaux-Nickels bill. If Congress accepts the challenge, as Oklahoma recently did, they'll find they can help invigorate the consumer broadband marketplace, usher in increased investment and innovation, and bring greater choice and convenience for consumers.
SBC Communications Inc. (www.sbc.com) is a global communications leader. Through its subsidiaries' trusted brands - SBC Southwestern Bell, SBC Ameritech, SBC Pacific Bell, SBC Nevada Bell and SBC SNET - and world-class network, SBC companies provide a full range of voice, data, networking and e-business services, including local and long-distance, high-speed Internet access and data transport, network integration, software and process integration, Web site and application hosting, e-marketplace development, paging and messaging, as well as directory advertising and publishing. America's leading provider of high-speed DSL Internet service, SBC companies currently have 61.3 million access lines nationwide. SBC has a 60 percent equity interest in Cingular Wireless, its joint venture with BellSouth, which serves more than 20 million wireless customers. Internationally, SBC has telecommunications investments in 28 countries and has annual revenues that rank it among the largest Fortune 500 companies.
OT-kinda & across the desk from TC
Imagine what the CEO's of SBC / VZ / BLS will feel when we announce our chip[s] / thing a ma gig / platform[s] to the market either directly or indirectly.
Just imagine MSFT watching AOL self-distruct and smilling at the giant debt service problems AOL has and its just getting worse.
Imagine the former Time-Warner employees cheering when they heard about the possibility of an AOL spinoff to someone else, naturally after bankruptcy issues, do to the huge debt imho.
Point is folks, our little bitty BB company traded stock will climb after TC "shows the beef" to the needy cash starved telco machines.
IMHO we are still clearly going to fetch around $413.00 per share over time as part of perhaps a MSFT type company that can and will spoon feed the world with our chip[s] / platform[s] / thing a ma gig..
After reading of the AOL restructuring it is really becoming possible for them to be interested in us. Let us face it they do have 25% of the traffic subscribers. Even though there stock sucks at the moment Dick Parsons from the old Rockefeller Group certainly has the connections for survivaL. JUST A THOUGHT
Roots of carrier collapse lie in '96 Telecom Act
By George Leopold
EE Times
July 17, 2002 (11:04 a.m. EST)
http://www.commsdesign.com/story/OEG20020717S0027
WASHINGTON — The likely demise of a competitive telecommunications market, a prospect with serious implications for the electronics industry, can be traced to legislative wheeling and dealing in the mid-1990s that resulted in the deregulatory Telecommunications Act of 1996.
The goal of the Telecom Act, a long overdue rewrite of telecommunications laws dating back to the creation of the Federal Communications Commission in 1934, was to open the local telephone market and local carriers' "last-mile" monopoly to competition. Indeed, "competition" quickly joined the pantheon of political catch phrases within the federal government and industry, alongside "free enterprise" and "deregulation."
The collapse of WorldCom Inc., the nation's No. 2 long-distance carrier and leading Internet provider, appears to have changed all that. While competition remains a cherished goal, the bursting of the telecommunications investment bubble has forced a reexamination of what went wrong and what if anything can be done to preserve a competitive market.
The promise of the Telecom Act has moved to the fore since WorldCom announced on June 25 that it was restating earnings for the last five quarters to the tune of $3.8 billion. John Sidgmore, WorldCom's embattled chief executive officer, invoked the law in a July 2 press conference here: "WorldCom is one of our last hopes for America to realize the intended benefits of the Telecommunications Act of 1996," Sidgmore said, adding that the company's survival would ensure competition in a rapidly consolidating telecommunications industry.
A week later, Sidgmore said the company would likely have to file for bankruptcy protection in order to protect its remaining assets from creditors.
'Overinvestment unleashed'
The problem, observers said, is that the act led to overcapacity, including the construction of 14 long-haul data networks in two years. Network demand has fallen far short of projections, wiping out many of the competitors spawned by the telecom law.
"The [telecommunications] act unleashed overinvestment," said Susan Kalla, a telecom industry analyst with Friedman, Billings, Ramsey Group Inc. (Arlington, Va.). "There's still a bottleneck."
Bush administration regulators, who have been criticized for doing little to enforce parts of the Telecom Act, have also invoked its goals as they attempt to quell nervous financial markets.
"My colleagues and I deeply appreciate that the goals of the Telecommunications Act cannot be achieved without a concerted effort by government and corporate leadership to restore investor confidence," FCC chairman Michael Powell said on July 9.
While WorldCom's businesses may have had less to do with the dynamics of the Telecom Act than those of smaller players like bankrupt Northpoint Communications, industry watchers said few considered how the regional Bell operating companies (RBOCs) would respond to the law.
Since the law was enacted, RBOC companies like SBC Communications Inc. (San Antonio, Texas) have racked up millions of dollars in fines for failing to open their facilities to competitors. In January, for example, the FCC proposed a $6 million fine against SBC for attempting to restrict competitors' use of "shared transport."
The strategy of paying fines to keep out competitors has contributed to the collapse of tele-communications competition, analysts said. No one anticipated the RBOC tactics, said Allan Tumolillo of Probe Research (Cedar Knolls, N.J.), and what they would mean for competitors like WorldCom. "The RBOCs knocked the snot out of them."
Still, industry watchers such as the bearish Kalla said some of the act's goals could still be met. "It's a big industry. Competition is not dead," she said. "The capital structure just doesn't support the industry's current price structure. Something's got to give. You need consolidation."
Former FCC Chairman Reed Hundt said the Telecom Act has helped wireless companies compete against the incumbents. He estimated that wireless providers have grabbed about 10 percent of the long-distance market based on their deployment of last-mile technology.
In the aftermath of accounting scandals at Global Crossing, WorldCom and other carriers, Hundt said the goals of competition are hanging in the balance. "The big question in the U.S. is whether we are going to stop the process and re-entrench the RBOCs," he said.
Consolidation looms
Most observers of the telecom collapse agree that industry consolidation is imminent. An earlier investment in Level 3 Communications Inc. (Bloomfield, Colo.) by a group that included Berkshire Hathaway chairman Warren Buffett may be the opening shot. "Buffett will be a consolidator," said Hundt, now a senior adviser with management consultants McKinsey & Co.
Analyst Tumolillo nevertheless predicted "retrenchment on all sides" as the remaining players in the telecom industry wait to see where the next shoe drops.
"I see a number of forces for a growing trend toward mergers, which would mean less competition," said Clifford Holliday, author of a new report on the future of the telecom industry. Holliday said those forces include the consolidation of large vendors, mergers among smaller vendors and "the impulse to recreate the old Bell system."
zenseti......I surely didn't and in a short span of time it won't much matter. Like Johnnie Apple Seed this early group was planting seeds and without some worms continuing to eat away with smoke and mirrows double talk [B&S] these farmers stuck with the project.
Perhaps some would have quit, rather than take the abuse from early shareholders / potential partners and of course us in the various chat rooms.
Tom and Brad don't have time to chat nor read our jibberish, they are to focused on the "Last Mile".........and I think they see the finish line even if we don't just yet.
34Simmons
I think the Senate just helped NVEI and the markets out with this one..jmho of course. The DJ reversed a 200+ point loss and closed just slightly positive and the NAZ was green today allowing a mood change to commence. Now it is up to Tom to rally our Investors both new and existing. Great agenda for tomorrow and nothing but positive events in our future. Go New Visual.
Reasons for a rally....
Senate buries stock-option expensing reform by Rex Nutting
The Senate killed without a vote a proposal by Sen. John McCain, R-Ariz., that would require companies to account for the costs of stock options grants in their quarterly and annual reports. McCain promised that he would not rest until the Senate votes on the issue. McCain said current accounting of stock options has misallocated capital toward high-tech firms and amounts to just another accounting lie. Killing McCain's amendment to the accounting reform bill was a top priority of the U.S. Chamber of Commerce and high-tech lobbyists.