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Author: dunce2Fool One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2302  
Subject: Re: Insider sells/who do we ask Date: 3/23/2001 10:36 PM
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" All the hype has been on the deployment,unfortunately, not enough time has been spent on their marketing plan."

Last year, in the gold rush flowing through fiber, Wall Street valued facilities based CLEC's by the route and fiber miles deployed in merchant markets.

As the bubble was popping last March, investors began to realize that it is not the amount of fiber, but the ROI/fiber mile. That is why you are seeing telecommunications companies ... CLEC, RBOC and IXC alike focusing more on revenue + sales than announcing new markets.

There was an allusion to MFNX owning the "last mile" in a post along this string. That is true and the reason why MFNX is a great long term buy. There is a HUGE glut of long haul fiber: Level 3, Williams and others who have eaten into T, FON and WCOM's margins for handling traffic.

But there is not a lot of companies that build large metropolitian rings to compete with the RBOC's. MFNX is a largely a 'first mover' in this field. (Okay forgive me for not mentioning MFS that built and provided WCOM with UUNET ... and that is one of the very few segments in WCOM's portfolio that is making money; and the only reason why they would be acquired by a RBOC ... and precisely my point.)

As far as business plans, MFNX is deemed to be the carrier's carrier and their stated business plan centers around providing a neutral means to enter merchant markets with high fiber count cables. Look to see who their largest carrier customers are: SBC for 30 cities, VZ for $500 million, Williams, etc.

Then add in the logo accounts: AOL, Chase, Salomon Smith Barney, and so forth ... these guys may curtail their technology spending in the short term, but their bandwidth needs are not decreasing.

The RBOC's are looking to get into long distance and to provide data across their limited boundaries, and will need the fiber to do it. Note that BellSouth has yet to significantly expand their domestic presence outside of their footprint.

Why look to MFNX for a long term lease on fiber ... because they can built it cheaper and faster, utilizing economies of scale. Remember that MFNX has stated that they typically install 8 to 14 ducts in their rings when building in a city. How difficult and costly is it to pull another cable?

To be sure, there will be an exacting in the telecommunications market place ... but based upon MFNX's business plan, niche in the market and relatively small debt burden, MFNX will prevail through these trying times.

But, hey, what do I know ... I'm down 26% since last year being heavily focused on tech and telecom stocks. The good news is that my time window is not short.
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