What the PR *really* says...
The general sentiment r.e. Huff's letter seems very positive... Some on TA board expressing dismay that the PPS didn't go up, but frankly that doesn't surprise me... I won't talk PPS on this board, but I would like to analyze the PR. Forgive the tome (I didn't have time to make it shorter)...
1) First the subject of ISO. There have been many posts on here about ISO 9000 type standards. Some very informative, but (IMO) irrelevant. When Huff said, We are now fully ISO certified by MasterCard, I suspect what he meant was We are now fully compliant with MasterCard's PayPass ISO/TEC 14443 specifications. There is a BIG DIFFERENCE!... ISO manages thousands of industry standards... ISO 9000 is about management and business processes... ISO/TEC 14443 is about transaction security.
2) the exuberant US consumer acquisitions costs of VONAGE, the recent price wars between the Baby Bells, and the industry shocking 90 day E-911 Compliance Program implemented by the FCC.
The price wars between the baby bells are "recent"?... We consider six to seven years to be "recent" history in this business? Vonage, et al, will find themself in a similar price war for VoIP in the months ahead... after all, isn't that GTE's message "VoIP for less"? Frankly, without a novel, proprietary, must-have solution that blows the competition's prices away, no VoIP provider will escape the battling (scraping) for ever tinier profits (or ever increasing loses) in VoIP... I can't imagine any such revolutionary change within the current context of VoIP. The last-mile provider will (for the foreseeable future) be the most profitable... and ironically, if GTE brings a third viable contender into the last-mile game (with Stratelitte, joining local telco and cable), that will have the effect of driving prices down for last-mile... so any market analysis of GTE's Stratelite broadband delivery value must necessarily take into account the downward pressure that it's very existence will have on the sector.
The clincher, for me, is the last part about the industry shocking 90 day E-911 Compliance Program. HOLY COW... Is Huff Serious?!?!?! On March 10, 2004, the FCC released a Notice of Proposed Rulemaking (Refer to WC Docket No. 04-36, Notice of Proposed Rulemaking, 19 FCC Rcd 4863, 4864, para. 1 n. 1) regarding the applicability of basic 911, enhanced 911, and related critical infrastructure regulation to VoIP and other IP-enabled services. (see para. 53 of the subject notice). There have been a string of legal briefs and court orders issued since then (with Vonage pretty much in the thick of it), that *anybody* serious about VoIP should have been plugged into... yet Huff calls it an "industry shocking 90-day" issue? Sorry... but it was apparently only shocking to GTE :(
3) I felt that a prior PR was poorly written because it gave the impression that management was asleep at the wheel... the reaction (from some) was 'don't be so picky... it's just poorly worded.. .they're not really asleep at the wheel.' But now this letter to shareholds mentions far-reaching legal and regulatory changes in bank card and money transfer policies and procedures, resulting from security initiatives like the USA Patriot Act, have significantly "raised the bar" and increased the level of complexity of these financial instruments and services... HELLO!?!?!?! Where have we been for the past four years?!?! *Nothing* in the Patriot Act should have been a surprise! None of the implicit restrictions related to the Patriot Act (such as controls on cash flow that might potentially fund terrorists) should have been a surprise.
I want to see growth through true LEADERSHIP! Instead, I read the PR as, "Gee, we've spent alot of money going down some path only to discover that it's too hard and gosh it's too bad we didn't see the handwriting on the wall earlier, but we have a *new* and *better* plan now!"... Why in the world should we believe that this *new* plan is any more thought out than the *old* plan? Well... let's examine the new plan for a minute...
We're going to make it easier (turnkey?) to roll-out Vonage style VoIP service to second and third world countries... Ummm... I'll repeat it (from earlier post)... There is no future in VoIP... VoIP will be virtually FREE to all users within 5 years (you can quote me on it)... Vonage has no future... Skype, on the other hand, *does* have a future, because it's free. People in third-world countries can't use VoIP without broadband... Bringing them broadband will make you rich... Once you bring them broadband, though, they'll use freely available VoIP...
I continue to be very disillusioned by the GTE focus on VoIP... It's a mistake... It's a losing proposition unless we can muscle in on some regulatory niche (e.g., getting some banana republic's leadership to outlaw all VoIP except the state-sanctions, GTE-provided solution).
4) Personnally, I think the "hype" in the letter to the shareholders is unbecoming. I prefer a more serious and well-thought-out letter... calm and deliberate... rather than excited and exhuberant... The "supercharged" rhetoric just left me more concerned that Management is good at selling ideas and dreams to investors (and hopefully partners)... I'd much rather have some reassurance that management is good at running a business. I hope I'm wrong, but this letter is full of signs (IMO) that they are *not* running the business very smartly... They are, I fear, still asleep at the wheel.
jmho / glta
~rdw~
I'm only in it for the Strat... fly baby... fly!
AI
