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If TyCom goes to $7 per share, it's most definitely a buy. At the very least it's a pair trade: go long TCM and short one of its weak competitors. Maybe GX. Why? Because:

TyCom has a growing cash making machine in its fiber-optic cable manufacturing and installation business. This is a safety net and guarantee against bankruptcy. This is also an integrated internal source of supply for the company's global network (the first of which will be ready for service later this year - crossing the Atlantic). No other competitor has this advantage. Global Crossing certainly has no guarantee against bankruptcy. That goes double for Williams, Level 3, 360networks, and GTS. None of these companies has any ability to reach self-sustaining operations in the near-term.

Global Crossing? They're not as rosy as the Fool's GX board members would have you think. If you look at what they said during their last earnings conference call and tried analyzing their revenue streams, you'd see that a massive amount of revenue growth came from voice: a LOW MARGIN AND SHRINKING business. Another large chunk of their business comes from IRUs. But competing head to head on IRU sales with TyCom would not be a good idea because TyCom has the low cost advantage due to its integrated manufacturing base.

So a short - long play of GX (short) and TCM (long) would be a good pairing. TCM should outperform GX over the long haul. If you look at GX's debt load and cost structure, it becomes apparent that they'll need to grow dramatically while controlling costs. This is not a company run by operationally experienced management. The CEO, Chairman, and CFO are all deal oriented:

- Gary Winnick, Chairman: came from Drexel Burnham and worked with Michael Milken in Hollywood in the Junk Bond glory days (before the indictments, of course). Is an investment banker and bond salesman by trade.

- Tom Casey, CEO: background is law. Worked for Merril Lynch as an investment banker and one of the deal makers taking GX public.

- Dan Cohrs, CFO: background is a Harvard professor and later mergers & aquisition work at GTE. Very intelligent and a good speaker. No operational experience prior to GX. Maybe learning on the job?

Just my 2 cents.
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Wow!

ehh!
Long NicolaiNJ
Long TCM
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<TyCom has a growing cash making machine in its fiber-optic cable manufacturing and installation business. This is a safety net
and guarantee against bankruptcy. This is also an integrated internal source of supply for the company's global network (the first
of which will be ready for service later this year - crossing the Atlantic). No other competitor has this advantage. Global
Crossing certainly has no guarantee against bankruptcy. That goes double for Williams, Level 3, 360networks, and GTS. None
of these companies has any ability to reach self-sustaining operations in the near-term.>

If all of these companies go bankrupt, then who is going to continue to pay for TCM's services? The CSCO's, JDSU's are tanking because the market realizes that their growth rates are going to be a fraction of what they were. The same can be said of TCM's money making businesses. Your logic is severely flawed.
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If all of these companies go bankrupt, then who is going to continue to pay for TCM's services? The CSCO's, JDSU's are tanking because the market realizes that their growth rates are going to be a fraction of what they were. The same can be said of TCM's money making businesses. ... (insult snipped :)

Good point. And to know the answer, you'd have to know something about the subsea business, which obviously you don't. If all these companies go bankrupt, then who's left? The same guys that have been buying subsea systems since the beginning of time: the incumbents. Deutsche Telekom, Telecom Italia, France Telecom, British Telecom, NTT, JapanTel, SBC, Optus, SingTel... you get my point.

Nick
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<< If all these companies go bankrupt, then who's left? The same guys that have been buying subsea systems since the beginning of time: the incumbents. Deutsche Telekom, Telecom Italia, France Telecom, British Telecom, NTT, JapanTel, SBC, Optus,>>

That's great that the DT's, BT's and the XYZT's of the world will pick up the pieces of the TSIX's and LVLT's and complete their networks. What you are saying is if the undersea cable networks business model fail, then TCM is the best investment because they can fall back on supplying these failed business models. It would be a one shot deal. I personally would not want to be in the business of supplying a proven failed business model. I stand by my original statement, your logic is severely flawed.
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What you are saying is if the undersea cable networks business model fail, then TCM is the best investment because they can fall back on supplying these failed business models. It would be a one shot deal. I personally would not want to be in the business of supplying a proven failed business model.

ummmmmduuuhhh:
I have neither the time nor the desire to educate your ignorant butt on the telecommunications industry. The quick take-aways are:

1) The incumbent telco providers have been around for almost 100 years. And guess what, they'll be around after you and I are long gone. You call the business model failed? You must be some kind of moron. The incumbents are the only telcos with stock prices that aren't falling apart! Incumbents have real profits! Of course, you probably don't know what those are.

2) Believe it or not, the incumbents do offer data services and do have to expand their transoceanic capacity. Yes, even if TSIX and LVLT go to zero, data traffic across the Atlantic and Pacific will still be growing. Thus, there will still be business for TyCom and Alcatel (the top two subsea fiber-optic system manufacturers) as new subsea systems are required in the future.

Nick
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<<The incumbent telco providers have been around for almost 100 years. And guess what, they'll be around after you and I are long gone.>>

I thought we were talking about the TSIX's and LVLT's of the world. Did the record skip?

<<Believe it or not, the incumbents do offer data services and do have to expand their transoceanic capacity. Yes, even if TSIX and LVLT go to zero, data traffic across the Atlantic and Pacific will still be growing.>>

If TSIX's and LVLT's business models fail then TCM's core business will suffer. If you can't understand this you shouldn't be posting or investing.
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As a new memeber of the TCM board, I would like to say that I think this "uhmuhnum" person doesn't understand the fundamental principals of the telecom business. Data transmission needs WILL grow exponentially for many years to come as the "clicks and bricks" strategy unfolds in a way that requires every business in every industry to roll out second generation ERP(enterprise resource planning)/KM (Knowledge management) systems that interconnect them with their partners/customers, etc. from around the world. Not only will text and pics be sent, but video as well. Video and enhanced "rich-media" require tons more pipe than text.

All this data needs to be transmittable some way. So how do you get data hyper fast across the world?? With the satelite tech not providing the cost effective solution (yet???), undersea cable is the only real answer.

There is one truth. Data transmission requirements are going to grow exponentially and it needs to be sent across continents. TCM business model can only fail if a technology emerges that differs in a way that makes undersea fiber obsolete (possibly data lasers - bench testing only).
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TCM business model can only fail if a technology emerges that differs in a way that makes undersea fiber obsolete (possibly data lasers - bench testing only).

Not trying to offend you adder4411 but laser isn't as reliable as cable. Just like you can call anyone from your home phone which i hope has a solid copper line and you will have a lot less interference then if you call same person via cell phone. That is exact reason why so many WAN (wireless area network) companies can't really compete very well with solid fiber networks. Especially when you are in the cities such as New York City or Dallas. Also no matter how strong laser is, it has a great lengt to travel but then light travels 300k/s so it shouldn't be a problem but if there is an obsticle you know how much data will be lost? Lasers aren't as reliable and they will need converters and repeaters. Either way, the point that I'm making is that cable better the wireless. Maybe not as fast but certainly more reliable.

DoW-AMT
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