Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
Does anyone have any idea why this stock won't budge?

Regulatory uncertainty. This was an original Hidden Gem pick because of the expectation that FCC rules would ensure TALK would be able to maintain a position in the local phone service market and not be squeezed out by the Baby Bells. This did not happen. While VoIP and cable internet phone service has continued its slow penetration, TALK has been forced to accept higher rates for access to the Bell networks to remarket service to customers. This has cut the discount margin they can offer, which subsequently reduces the incentive to switch to TALK.

That said, TALK is trying to build their own networks to eliminate the dependence on the Bell networks all together, but this is a slow and costly investment. You should pay close attention to how this is going in the quarterly conference calls as the future of the company depends on its ability to establish its own infrastructure and thus be able to offer services to customers at substantial discount to the regional monopolies. Note that Hidden Gems did not wait for this uncertain outcome, and sold its position long ago.

Fuskie
Who believes that the opportunity to offer both high speed DSL and voice services over its own networks could make or break this company...
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement