An Interview With Scott Cleland and William Whyman -- Each year around this time, the two principals of the Precursor Group, a Washington, D.C.-based research boutique specializing in telecommunications and technology, play host to hundreds of investors and industry participants eager for the chance to make connections and key into the most au courant thinking in the field. Always a step ahead of the trend, the pair draw on their deep knowledge of regulatory processes, and their formidable contacts across government and industry, to assess the issues confronting the industry and the implications for tech and telecom stocks. Today Cleland and Whyman are far more optimistic about the telecom-tech investing cycle than when we last spoke with them a year ago. Here are their latest thoughts.
Also, regulation is going to turn around; the FCC [Federal Communications Commission] is going to change regulatory policy from one that encouraged disinvestment to one that encourages investment. The FCC soon is going to set a new, more investment-friendly growth trajectory for telecom.
Q: Any other catalysts for change in the sector? Cleland: When we called the bottom in late September, telecom was at a historic low of 3.7% of the Standard & Poor's 500 index, and it's still only 4.1% of the S&P. The historical average since 1990 has been 7.5%. It was 5.1% at the beginning of 2002. As the market realizes that telecom is slowly recovering, there will be a major sector rotation back into the sector, and that will provide more upside.