DrunkenBastard
Storage is cool
And another one bites the dust. BuhBye MCI.....
And Anderson have their grubby mitts all over this one too.
And Anderson have their grubby mitts all over this one too.
WorldCom hits the dirt
- Thread starter DrunkenBastard
- Start date
timwhit
Hairy Aussie
Front page of the Chicago Trib today. I think Arthur Anderson is really screwed now.
I have a feeling that American Business is about to see another period of heavy regulation coming it's way. My predicion is that the SEC is going to start cracking some skulls to make sure this kind of crap stops happening. Investors get kinda scared when they keep seeing all these huge multi billion dollar scandals happening.
Government regulation seems to go in cycles, during the 80s the goverment went through a period of deregulation and the economy was great during the 90s. However, with recent events compounding I expect the government to start regulating business a lot more than they have in the past 10 years.
As for WorldCom...was it Gary who predicted that they would be bought out by MS? Who knows what will happen now.
I have a feeling that American Business is about to see another period of heavy regulation coming it's way. My predicion is that the SEC is going to start cracking some skulls to make sure this kind of crap stops happening. Investors get kinda scared when they keep seeing all these huge multi billion dollar scandals happening.
Government regulation seems to go in cycles, during the 80s the goverment went through a period of deregulation and the economy was great during the 90s. However, with recent events compounding I expect the government to start regulating business a lot more than they have in the past 10 years.
As for WorldCom...was it Gary who predicted that they would be bought out by MS? Who knows what will happen now.
Dozer
Learning Storage Performance
DrunkenBastard said:
Here's some interesting background on this topic...wonder who's next?
http://www.guardian.co.uk/worldcom/story/0,12167,744779,00.html
CougTek
Hairy Aussie
Nortel. Worldcom was one of their main customer, if not their biggest customer. I wonder where that madness will end.
Most of these bankrupts occur because of a little bunch of bastards who control or greatly influence the stock market. The economy is on the rise, but because of those damn S.O.B., the stock market doesn't follow and major companies bite the dust. It's a shame that our society let this happen again. We should have taken lessons after the 1929's crash. Measures have been taken, but obviously, it's not enough. Our economy is still controled by a few slugs, who think only about themselves and give fuck all about the rest.
timwhit
Hairy Aussie
After the crash of '29 the SEC was put into place along with the FDIC and some other agencies that I can't remember right now. These agencies were supposed to protect the public from a huge crash ever happening again.
But, like I said before...as soon as the market starts to slide the government stops the heavy regulation and forgets what happened 10 or 20 years ago.
But, like I said before...as soon as the market starts to slide the government stops the heavy regulation and forgets what happened 10 or 20 years ago.
Mercutio
Fatwah on Western Digital
Well, if the tech/telecomm recession wasn't bad enough, it's about to get many times worse.
Here's what will happen: Worldcom bites it. Someone else comes in and buys their assets for pennies on the dollar. Suddenly the cost for the new organization is NOTHING like it is for everybody else (still paying for all the cable they laid, and all the expensive hardware needed to run the network). They drop their rates to nothing... and their competitors wither to nothing. Now there are thousands more unemployed techies, a ton of suppliers with no one to sell to, and as bad as things are now, they'll only get worse.
At least, that's what I see in my little crystal ball.
Here's what will happen: Worldcom bites it. Someone else comes in and buys their assets for pennies on the dollar. Suddenly the cost for the new organization is NOTHING like it is for everybody else (still paying for all the cable they laid, and all the expensive hardware needed to run the network). They drop their rates to nothing... and their competitors wither to nothing. Now there are thousands more unemployed techies, a ton of suppliers with no one to sell to, and as bad as things are now, they'll only get worse.
At least, that's what I see in my little crystal ball.
Cliptin
Wannabe Storage Freak
Will we ever know how much it really costs to run the US IP infrastructure?
Worldcom carried so much of that traffic but we really don't know how much it costs to run. I suspect connection rates will go up although Mercutio's suggestion sound equally likely.
Worldcom carried so much of that traffic but we really don't know how much it costs to run. I suspect connection rates will go up although Mercutio's suggestion sound equally likely.
Mercutio
Fatwah on Western Digital
I can see rates going up due to lobby pressure by the remains of the telecomm companies. I can also see a "divide worldcom into pieces" offer from a number of sources. In the end, whoever ends up with a piece of "worldcom-from-the-bankruptcy-auction" will have found a way to enhance their business for far less than the cost of traditional business, and that will probably be an unfair advantage in the marketplace.
James
Storage is cool
So here we are in Florida for our annual global sales conference. Day two of the conference, someone grabs a mike and announces that Worldcom has been busted cooking the books. At the start of day three our managing director stood up and slowly dropped nine pennies one by one into a glass - Worldcom's share price when it was suspended from trading.
It's a huge opportunity for Cable & Wireless to really tie up the global corporates comms market - at the moment we only have one competitor, Equant, and their parent (France Telecom) recently announced another record loss. C&W has a global network, the number 1 position in the global hosting market (22%, well ahead of #2, IBM, at 17% according to IDC), #3 IP carrier in the world (after Worldcom and AT&T), and the world's largest frame network (over 500 nodes), plus we have 2.6bn pounds (!) net cash, free of debt, in the bank. We could buy Worldcom out of cash at the moment and still have a couple billion dollars left over (mind you, Worldcom's debt load would be pretty crushing).
It's a huge opportunity for Cable & Wireless to really tie up the global corporates comms market - at the moment we only have one competitor, Equant, and their parent (France Telecom) recently announced another record loss. C&W has a global network, the number 1 position in the global hosting market (22%, well ahead of #2, IBM, at 17% according to IDC), #3 IP carrier in the world (after Worldcom and AT&T), and the world's largest frame network (over 500 nodes), plus we have 2.6bn pounds (!) net cash, free of debt, in the bank. We could buy Worldcom out of cash at the moment and still have a couple billion dollars left over (mind you, Worldcom's debt load would be pretty crushing).
Tea
Storage? I am Storage!
So James - just what is it that C&W have done right? With most of the others falling over one by one, why is it that C&W are looking good? (Apart from the fact that they hire the very best and brightest staff, of course. 
)
)James
Storage is cool
Well, they may have the best and brightest staff, but they won't have me for much longer - my long awaited movement over to KPMG seems immenent at last.
Actually, C&W's position is an accident of history - they've been an international carrier for about 140 years. When they owned Global Marine (which they sold to GX some time ago for reasons I still can't fathom, pardon the pun) they used to lay nearly all the undersea cables in the world, in return for equity in the cable - which used to be a great deal at the time given that Global Marine was pretty much the only game in town, certainly the largest anyway. So they ended up with a huge global cable network - it's still over 400,000 miles of fibre even today, making them number 2 in the world - for basically a tiny outlay.
Their business was always supplying international capacity and they have very rarely owned large amounts of domestic infrastructure - Optus, Hong Kong Telecom and Mercury are the exceptions, plus of course the legacy places where they are the national incumbent carrier, like the Carribean, Fiji, Vanuatu, Macau, the Seychelles, the Falklands, Ascention, Diego Garcia etc. etc. They were therefore well positioned when large multinationals went global with scads of experience on how to build global networks.
Plus they had a bunch of valuable assets they sold quite well - Singtel probably paid $4-5bn too much for Optus, and PCCW certainly overpaid for HKT (although that deal was badly structured by C&W and the shares never amounted to much).
Buying the MCI Internet backbone was a ballsy move that has stood them in good stead, and recently they have made some good purchases, like Exodus and Digital Island, for pennies on the dollar.
C&W is a bit of a quiet achiever, being a British company - the PR and marketing end of things is pretty much invisible and ineffective, but like they say - those that like us, like us a lot. Also being a British company means that the network is designed and built by some very very bright people, to extremely high standards.
We've pretty much got the institutional finance market wrapped up (Citigroup, Goldman Sachs, Merril Lynch, Lehmann Brothers, Nomura Securities, JP Morgan Chase, Bank of America, BNP Paribas, Barclays, Bank of Japan, Visa, SWIFT, UBS etc.) and we have some big IT customers (Compaq's global ATM network is with us and so is Accenture's, Sony uses us, Sun Microsystems, Intel, Cisco, Nortel etc.). We're less strong in the other sectors, although we do have some big customers there too.
At the moment having a huge net cash position, a strong position in the market, and a global network pretty much puts us in an unbeatable position for integrated comms solutions for US, UK and Japan-based very large multinationals, particularly as Worldcom melts down.
Actually, C&W's position is an accident of history - they've been an international carrier for about 140 years. When they owned Global Marine (which they sold to GX some time ago for reasons I still can't fathom, pardon the pun) they used to lay nearly all the undersea cables in the world, in return for equity in the cable - which used to be a great deal at the time given that Global Marine was pretty much the only game in town, certainly the largest anyway. So they ended up with a huge global cable network - it's still over 400,000 miles of fibre even today, making them number 2 in the world - for basically a tiny outlay.
Their business was always supplying international capacity and they have very rarely owned large amounts of domestic infrastructure - Optus, Hong Kong Telecom and Mercury are the exceptions, plus of course the legacy places where they are the national incumbent carrier, like the Carribean, Fiji, Vanuatu, Macau, the Seychelles, the Falklands, Ascention, Diego Garcia etc. etc. They were therefore well positioned when large multinationals went global with scads of experience on how to build global networks.
Plus they had a bunch of valuable assets they sold quite well - Singtel probably paid $4-5bn too much for Optus, and PCCW certainly overpaid for HKT (although that deal was badly structured by C&W and the shares never amounted to much).
Buying the MCI Internet backbone was a ballsy move that has stood them in good stead, and recently they have made some good purchases, like Exodus and Digital Island, for pennies on the dollar.
C&W is a bit of a quiet achiever, being a British company - the PR and marketing end of things is pretty much invisible and ineffective, but like they say - those that like us, like us a lot. Also being a British company means that the network is designed and built by some very very bright people, to extremely high standards.
We've pretty much got the institutional finance market wrapped up (Citigroup, Goldman Sachs, Merril Lynch, Lehmann Brothers, Nomura Securities, JP Morgan Chase, Bank of America, BNP Paribas, Barclays, Bank of Japan, Visa, SWIFT, UBS etc.) and we have some big IT customers (Compaq's global ATM network is with us and so is Accenture's, Sony uses us, Sun Microsystems, Intel, Cisco, Nortel etc.). We're less strong in the other sectors, although we do have some big customers there too.
At the moment having a huge net cash position, a strong position in the market, and a global network pretty much puts us in an unbeatable position for integrated comms solutions for US, UK and Japan-based very large multinationals, particularly as Worldcom melts down.
Mercutio
Fatwah on Western Digital
The question is, with C&W having, oh, USD$5 billion in the bank (why do they have that much cash on hand, again?), and it can't afford Worldcom, who can?
AT&T is hurting right now. None of the Regional carriers in the US are big enough to swallow all that... and beyond that I don't know enough to say anything.
Besides Microsoft, I mean (that'd be a mismatch in my view. Microsoft makes things while Worldcom is obviously a service business).
Maybe the whole thing will get sold off to a holding company and carved into scraps (Scraps + heaps of debt).
Or perhaps the Bush White House will arrange a bailout. There may be an excuse in US national security post-9/11 to not let a network that big fall out of control by a US company.
AT&T is hurting right now. None of the Regional carriers in the US are big enough to swallow all that... and beyond that I don't know enough to say anything.
Besides Microsoft, I mean (that'd be a mismatch in my view. Microsoft makes things while Worldcom is obviously a service business).
Maybe the whole thing will get sold off to a holding company and carved into scraps (Scraps + heaps of debt).
Or perhaps the Bush White House will arrange a bailout. There may be an excuse in US national security post-9/11 to not let a network that big fall out of control by a US company.
time
Storage? I am Storage!
Yeah, things that go bump in the night.
Mercutio
Fatwah on Western Digital
Yup. I left the door wide open on that one.
Although I'd argue that, rather than going "bump", they actually make a more squishy sound.
Although I'd argue that, rather than going "bump", they actually make a more squishy sound.
Fushigi
Storage Is My Life
Things that go down in the night?time said:
More seriously, a coworker was talking yesterday & said that Verizon & SBC are the only 2 US carriers who could take on Worldcom. AT&T, Sprint, etc. don't have the resources.
My opinion is that it'll be broken up, sold off to repay some of the debt.
FWIW, Worldcom carries about 60-80% of my company's traffic.
- Fushigi
James
Storage is cool
Wanna buy some stuff from a financially stable company, Fushigi?
The only thing Worldcom has that's worth buying is their customers, and I reckon most of the big ones of those will be up for grabs over the next month or two anyway.
We've had (large) customers call us up and tell us to replace everything that was provided by Worldcom.
(Funny that Worldcom's initials are "WC.")
The only thing Worldcom has that's worth buying is their customers, and I reckon most of the big ones of those will be up for grabs over the next month or two anyway.
We've had (large) customers call us up and tell us to replace everything that was provided by Worldcom.
(Funny that Worldcom's initials are "WC.")
James
Storage is cool
By whom?
No one has stepped up to the plate to buy Global Crossing. No one has offered to buy Williams. No one's making noises about buying Worldcom's carcass.
Telcos don't have any money, let alone around the $7.2bn to cover C&W's market cap + a sale premium (usually about 50-100%) = ~$10-14bn. Even if you take the $4bn cash out of that it's still a goodly number. In fact C&W's board would (rightly) probably ask for more than the usual premium given that C&W has no debt, will be profitable again this FY and still has a big cash pile.
Merc, C&W's cash comes from the disposals of Global Marine, Hong Kong Telecom and Optus.
No one has stepped up to the plate to buy Global Crossing. No one has offered to buy Williams. No one's making noises about buying Worldcom's carcass.
Telcos don't have any money, let alone around the $7.2bn to cover C&W's market cap + a sale premium (usually about 50-100%) = ~$10-14bn. Even if you take the $4bn cash out of that it's still a goodly number. In fact C&W's board would (rightly) probably ask for more than the usual premium given that C&W has no debt, will be profitable again this FY and still has a big cash pile.
Merc, C&W's cash comes from the disposals of Global Marine, Hong Kong Telecom and Optus.
Mercutio
Fatwah on Western Digital
I was actually was thinking along Flagreen's line. $5B in the bank just seems like too much to have on-hand.
James
Storage is cool
It used to be much more. Until we bought Exodus, the investors got a special dividend and C&W did a 1.5bn pound share buyback the net cash position was over 7bn pounds (~$11bn).
Holding cash is a pretty good strategy at the moment, I think, given the instability in telecoms at the moment. It lends us a lot of credibility with customers. And what would you spend it on, anyway?
Holding cash is a pretty good strategy at the moment, I think, given the instability in telecoms at the moment. It lends us a lot of credibility with customers. And what would you spend it on, anyway?
Mercutio
Fatwah on Western Digital
Redundant OC-192s to an apartment in Griffith, Indiana?
Well, that's what *I'd* spend it on.
Seriously? I'd probably go shopping for starving startups in silicon valley. I might be a little more generous with wage/benefit increases for my workers . And I'd see what I could pick off of MCI's carcass at a fire-sale price.
Well, that's what *I'd* spend it on.
Seriously? I'd probably go shopping for starving startups in silicon valley. I might be a little more generous with wage/benefit increases for my workers . And I'd see what I could pick off of MCI's carcass at a fire-sale price.
James
Storage is cool
Merc, happy to sell you what you're asking for - I don't have prices for faster than OC48 though. The local loop charge alone is quite respectable.
I don't see much point in C&W buying up startups in Silicon Valley - I reckon they have most of the bits they need to execute their strategy already. MFS and perhaps Digex would be the good buys from the Worldcom fire sale. The only other thing worth having from Worldcom is its large corporate customers and we (along with AT&T and Equant) are getting those anyway.
C&W already owns more fibre than Worldcom or GX.
I don't see much point in C&W buying up startups in Silicon Valley - I reckon they have most of the bits they need to execute their strategy already. MFS and perhaps Digex would be the good buys from the Worldcom fire sale. The only other thing worth having from Worldcom is its large corporate customers and we (along with AT&T and Equant) are getting those anyway.
C&W already owns more fibre than Worldcom or GX.
Mercutio
Fatwah on Western Digital
I'm thinking that there might be a business advantage - it'd amount to speculation, but y'all have the money to do it - to get some advantageous mid-term R&D squarely in your pocket. Particularly for the "Wireless" side of things. Owning enough fiber to circle the globe will matter less and less as more data can be pushed into the ether.
James
Storage is cool
Why buy the cow when everyone's willing to give the milk to you for less than it cost them to make?
Transoceanic cable will be required for a long time to come. Modern undersea cables carry up to 7.5Tb/s, the maximum wireless speed is 54Mb/s for local area networks, or up to 1Gb/s for short range laser shots (FSOs) like Terabeam.
Transoceanic cable will be required for a long time to come. Modern undersea cables carry up to 7.5Tb/s, the maximum wireless speed is 54Mb/s for local area networks, or up to 1Gb/s for short range laser shots (FSOs) like Terabeam.
Mercutio
Fatwah on Western Digital
54Mbit on an 802.11a Wireless net would be great, and I know I can buy APs for it, but so far as I know, NICs aren't available yet.
As often as I'm asked about it I think there's a lot of demand for wireless applications. 802.11-anything doesn't seem good enough in the times I've dealt with it and I think there might be a real opportunity in whatever comes next.
As often as I'm asked about it I think there's a lot of demand for wireless applications. 802.11-anything doesn't seem good enough in the times I've dealt with it and I think there might be a real opportunity in whatever comes next.
Fushigi
Storage Is My Life
Merc, SMC's Cardbus adapter is available: http://www.smc.com/index.cfm?action=products_show_description&productCode=SMC2735W. I haven't seen the PCI version just yet.Mercutio said:54Mbit on an 802.11a Wireless net would be great, and I know I can buy APs for it, but so far as I know, NICs aren't available yet.
I put in the SMC 7004 wireless unit (802.11b) as I didn't want to drill holes in the new house. Works fine, but I had to raise the WAP up a few feet as the mass of electronics (PC stuff on one side of the wall, A/V gear on the other) caused it to fall back to 2Mbps. Raising it up to about 7 feet off the floor brought the signal up to the full 11Mbps.
We also have 802.11b WAPs distributed around the corporate office, but I haven't used those just yet.
- Fushigi
Mercutio
Fatwah on Western Digital
I've worked with Cisco Aironet products and with cheapie little DLink 802.11b stuff a few times. The DLink offered faster connections out to about 30 feet away from the base, then dropped off to nothing. With the Cisco, once I tweaked its position (in the rafters), gave consistently "good" transfer rates - six or seven Mbps, but never hit the highs the Dlink got. Maybe I just didn't know enough about tweaking the Cisco unit.
You run into stuff like drop-offs while you're walking around with a notebook and, yeah, that range problem. Then you run into oddball dead areas and all kinds of other fun stuff.
I haven't really seen 802.11 work out past ~ 50 feet. It'd be killer if campus-wide coverage didn't wind up being so expensive, and that's what I tell people.
You run into stuff like drop-offs while you're walking around with a notebook and, yeah, that range problem. Then you run into oddball dead areas and all kinds of other fun stuff.
I haven't really seen 802.11 work out past ~ 50 feet. It'd be killer if campus-wide coverage didn't wind up being so expensive, and that's what I tell people.
Pradeep
Storage? I am Storage!
I notice that D-link or netgear are selling 802.11b enhanced APs and nics delivering 22mbit/sec?
Mercutio
Fatwah on Western Digital
Enhanced = proprietary, usually. Probably best avioded.
There are a whole lot of businesses in the world that would pay top dollar for reliable campus- and metropolitan-area non-LOS wireless. I think that was the direction I was trying to go with my earlier comments.
Anyway, WorldCom got worse today. Reversing reserves for the past few years in order to bolster earnings, and an announcement that the US gov't is going to ban Worldcom from servicing any future contracts. Ouch.
There are a whole lot of businesses in the world that would pay top dollar for reliable campus- and metropolitan-area non-LOS wireless. I think that was the direction I was trying to go with my earlier comments.
Anyway, WorldCom got worse today. Reversing reserves for the past few years in order to bolster earnings, and an announcement that the US gov't is going to ban Worldcom from servicing any future contracts. Ouch.
James
Storage is cool
It's all good for the rest of the global data market - which at this stage seems to consist of basically C&W and Equant, that's it. Then come the strong regional players - BT Ignite in Europe, AT&T in the US, and PCCW/Telstra/Reach and Singtel in Asia.
Whether Worldcom pulls itself out of the hole is pretty much irrelevant at this stage - I'd say it's thrown its entire MNC data business out the window. Considering that it generates much of the profits, that is going to be a big problem.
Just imagine if NTT bought Worldcom.
Whether Worldcom pulls itself out of the hole is pretty much irrelevant at this stage - I'd say it's thrown its entire MNC data business out the window. Considering that it generates much of the profits, that is going to be a big problem.
Just imagine if NTT bought Worldcom.