Sold my last 20000 shares yesterday. It's a major disappointment given my high hopes for TWTC, but I see brighter prospects elsewhere. I bought more XOCM yesterday at 2.47 - didn't get nearly as much as I'd hoped for - but feel good about my XOCM holdings after the earnings release. Thanks again, Dean Culligan. That was one message-board disagreement that turned out to be truly productive.
Three concerns drove my decision to sell TWTC:
1. Running out of time is an issue, despite the good job they've done in structuring their debt. The revenues need to come up sharply to justify continued increases in the share price and I'm not seeing it happening. XOCM is pushing VOIP like mad among small and medium-sized businesses. TWTC's marketing side does not seem to have adjusted. The little shots about the sales force posted by insiders underly real problems. I personally tried lighting some fires over VOIP a few months ago, but the response has been minimal and sluggish.
2. TWTC continues to spend heavily on CAPEX, but the enterprise revenue increases aren't keeping pace with the spending. Look at the raw numbers and not just the percentages over the past 6 to 8 quarters. At some point, the CAPEX spending needs to be justified by directly attributable revenue increases, and again it doesn't seem to be happening, probably due to weak marketing efforts. It would be ironic if Larissa's management weakness, after steering such a strong course technically and financially, turns out to be in the area where she is personally strongest. TWTC would be fine by now if the sales forces consisted of 500 Larissa clones, but she hasn't yet figured out how to reproduce her vision and fire.
3. At least part of the recent rise seems to have been fueled by takeover speculation that hasn't materialized. Since I'm posting this, they'll probably announce something tomorrow. However, my valuation based on the financials is $6 per share. I said it was worth 6 when it went up to 12, and said it was worth 6 when it went down to the 3's. My problem is that after three years of following TWTC closely, I still see it worth $6, and as I look out over the next 5 or 6 quarters, I don't see a strong possibility that the financials will justify a lot more than $6. There's always the chance that another speculative run-up will develop, or that merger talk will fuel another spike, but that's not the way I like to bet.
For those still long, best of luck. TWTC is still a reasonable bet, but I've reluctantly come to the conclusion that there are better ones.
"It's not worth arguing over. I stand by what I said. VoIP and wireless are alternatives."
That is what you do not get, VoIP is not an alternative; Fixed Digital Wireless is, but Fixed Digital Wireless is not the same as "wireless".
VoIP is Voice over Internet PROTOCOL and has NOTHING to do with "voice over the Internet", it is a different way of delivering voice to handsets out of a PBX. You CAN use VoIP over the Internet, but that is not how 95% of the companies that have VoIP use it.
Get on Cisco's website and learn why the CallManager is the hottest selling PBX out there for Enterprise customers and why the County of Ventura ripped out their old TDM switch for VoIP.
By your astute posts, I can tell you know a lot about this industry. What are some of your other favorite stocks? Would you be a buyer of XO anytime in the future? "
Astute posts?? I would venture that dnvrdude has no clue on fixed digital wireless and even less on VoIP. VoIP is not the same as "voice over the Internet" it is merely packet switched voice vs. traditional TDM and most of the Fortune 500 will have some kind of VoIP deployment by the end of 2008, almost half do already.
I am hoping for a good report as well. Anything over $190 million in revenue, and she'll fly.
TWTC can play where the big boys don't want to and where the littler guys can't. I'm staying long and strong, too. Still it's good to look for opportunities elsewhere.
Thanks for the comment =) TWTC is my favorite stock in the Telecom industry for several reasons. I don't know nearly as much about XO, but it's worth investigating. I will research it.
My other favorite stocks are RACK and MC at the moment. I was into NVDA for a while, but got out recently.
The reason I continue to say TWTC is a strong buy is because I think it is a very opportunistic company with a sound, conservative financial strategy. The stock has been doing well over the past couple years, but it's irritating that it doesn't do even better. I still think it will be in the 20's this year, and it should hit $20 soon. I'm hoping that TWTC gets an analyst upgrade after the earnings announcement, which I firmly believe will be good.
Honestly - wireless has about as much chance of replacing fiber in the foreseeable future as VoIP has of replacing traditional telephony. Neither of these technologies offer a level of service that is truly competitive (yet). They are rapidly coming into the marketplace, but they are alternatives, not replacements. If you've ever had a conference call on an IP phone, you know what I mean.
Large institutions are interested in quality first and price second. Wireless offers versatility and is a good choice for redundancy, but it isn't going to replace fiber until line of sight and interference issues are solved, as well as security concerns.
I really don't think TWTC has anything to worry about. Their metro fiber deployments are in high demand and will continue to be in demand for longer than the equipment will last.
Thank you for the kind words. Glad to know XO has worked out. XO still has plenty of fuel left for further upward movement. Their ability to offer both wireline and licensed-spectrum wireless services end-to-end will prove to be a major advantage. I expect to see more carriers moving toward that model in time. It's been pretty well proven in Europe.
Per� has been working out well. We started out in the remote suburbs of Lima, out beyond the reach of the cable systems, and are now moving back into the urban areas as we become established. We're providing more reliable internet service at a better cost than either the cable companies or the telco's DSL system, but as we start to go head-to-head with them, we're getting a lot more grief from the government. It's an old story, but still frustrating - you get left alone as long as you don't threaten any entrenched interests.
Had to smile a bit at denverdude's post, since dealing with those and service-stealing issues are day-to-day problems. We operate primarily residential and small-business WISP's using very cheap unlicensed-spectrum radios and multipoint distribution. There's a big difference in the security and denial-of-service vulnerabilities of these types of systems compared to the narrow-beam point-to-point wireless connections used to approximate fiber speeds for large business users.
In addition to encryption, security, and latency-detection software, the high-speed PTP systems such as Gigabeam's operate on a very narrow beam that renders drive-by sniffing impossible and makes spoofing quite difficult. The combination of narrowcasting, licensed spectrum and detection software make the risk manageable.
Of course, if you know what you're doing, you can also tap or spoof an optical system, though it's also expensive and difficult. There are no foolproof systems and the security concerns are valid, but the reality is that wireless for last-mile is beating fiber in the market even now, and the trend is accelerating rapidly.
That does not bode well for TWTC as it threatens to reduce the value of their last-mile fiber installations. TWTC's book value is highly dependent on the valuation of the installations used to increase their count of buildings lit, since those assets offset the huge debt. Writedowns may be far in the future, but they add to the sense that TWTC has a limited amount of time to make it all work.
None of this means that it won't work. I have great respect for Larissa's vision, and a buyout is certainly a possibility. The telco's move toward "price discipline" probably means that they've flushed all the competition they can for now. The only way to get rid of those still standing may be to buy them out.
There certainly is room for both fiber and wireless in the marketplace. What I like about XO is that it gives me a stake in both.
You said "It sounds really great, missing the point that the total revenue increase as a percentage of the amounts spent on CAPEX is pathetic: a cumulative 8-quarter revenue increase of 68.5M for a total expenditure of 240M"
Spending no more CAPEX, total revenue for that stated increase is $822M (3 year revenue). For a 240M investement, not too bad. Then consider that from that point forward much of the revenue will continue to flow without additional CAPEX. The real issue here is that there is so much writedown going on in the Telecom sector overall that it is amazing that this company is still in the financial position that it is in.
The only problem that I see is that they will run out of money to spend on CAPEX because they are selling too much business that needs fiber built. The execution that is missing is maximizing the revenue out of the built network. They need to go back and pick up some more business from the current base and customers in the multitennants that they just spent all that money on.