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Summary:

EXCLUSIVE ANALYSIS: What do Derek Jeter, A-Rod, New York Yankees and Global Crossing have in common? Well since May 2004, they have be on a tear and have hit a winning streak which is well unmatched. The on-field heroics of Jeter & Co., have been chronicled […]

EXCLUSIVE ANALYSIS: What do Derek Jeter, A-Rod, New York Yankees and Global Crossing have in common? Well since May 2004, they have be on a tear and have hit a winning streak which is well unmatched. The on-field heroics of Jeter & Co., have been chronicled well, the Global Crossing’s recovery has gone unnoticed. The stock has more than doubled to over $15 a share. Those of you who have short term memory problems, remember that Global Crossing was trading at around $18 a share in early January 2004. Wow! Just imagine if you invested a $1000 in Global Double Crossing, you would have enough money to go see the All Star Game in Houston, and stay a nice hotel and visit some of those clubs Houston is famous for.

What gives? I think what we are seeing is return of the speculators, or hedge-fund types, I like to call punters. They are expecting some sort of good news – which in this case can only mean a buyout. Why do I say buyout? Because I don’t expect any upside from their business. In other words, fundamentals of the wholesale bandwidth market stink!

The bandwidth market is still in the toilet. The pricing pressure on the Atlantic routes is so severe that you can actually get a 2.5 gigabit/second transatlantic cables for about $17,500 a month. The 10 gigabit per second connections are going for about $32,500 a month. My sources within the bandwidth trading community are telling me that at those prices, most carriers are struggling to recover they expenses.

So what is real reason behind Global Crossing’s upward surge? Some Wall Street types suggest that Mexican tycoon Carlos Slim and Richard Rainwater have been picking up Global Crossing stock in the open market, though it all talk. Slim is turning into a regular telecom tycon – he owns stakes in companies such as MCI and SBC, Telmex and America Movil. Slim owns ten percent of Global Crossing and is said to be interested in doubling his stake. Rainwater has about 14 percent of Global Crossing. Stay tuned more juicy bandwidth gossip to follow … oh well as juicy as it can get.

  1. i didnt think the clubs in houston like ricks were known outside of houston, interesting

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  2. the upside of doing an expose on enron broadband was the research one can do in a city like houston. i love houston by the way – the greatest sin city people don’t know about, and the super-duper friendly people. the steaks are brilliant, bourbourn is world class and of course, never a shortage of colorful characters

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  3. Awesome insider broadband gossip. I *love* reading things like that – real-world pricing information unavailable to the Average Joe.

    Question, what are your thoughts on Cogent? (AMEX:COI)

    I know they have a ton of debt, and they used to have a bad reputation in the web hosting industry… but I’ve got a few friends who use Cogent today, and they love it. Would Cisco really force them into Chapter 11?I doubt it. So why the US$4.4 million market cap? COI seems like a steal to this naive investor…. Help me understand the market opinion when Global Crossing knocks US$341 million cap.

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