COMMENTARY -- No one wants my conversation.
That's no surprise to the authors of the angry TalkBacks and e-mails that appear whenever someone disagrees with a column on their favorite stock or sector. But that's not what I mean -- criticism comes with this gig. Heck, I wouldn't be doing my job if everyone agreed with everything I write.
No, I'm literally talking about my conversations. And yours.
We're bad business. Our chats with friends across the country, discussions about what time to meet at the airport, greetings and best wishes for relatives overseas -- the telecom giants see that as a field of shrinking margins and a stagnant customer base.
So they want out. AT&T (NYSE: T) will create a separate tracking stock for consumer businesses. Worldcom (Nasdaq: WCOM) today said it has nearly completed plans to transform itself into "a more business-focused communications company."
Anything to please the stock market, which lately has withheld high valuations for all telecom companies except Qwest Communications (NYSE: Q), which was always a pure business for businesses. At least until buying US West.
Corporate is what it's all about, and if you aren't showing a strong hand there, your stock will be killed. See today's ravaging of Nextel Communications (Nasdaq: NXTL) stock price for a timely illustration:
"The main reason Nextel's shares are getting taken out and shot is management's admission that the battle to win Corporate America is getting more intense," writes Morningstar.com's Todd Bernier.
Consumers' only rationale for existence in the eyes of communications companies is to provide cash for the real war over business customers. Once that residential fuel supply starts to dwindle, as it has for AT&T, we're viewed as worthless. A performance drag.
And because Wall Street wants no part of us, telecom executives want to flee our market as quickly as possible.
Unfortunately for men like Michael Armstrong and Bernard Ebbers, they can't get rid of Main Street, precisely because no one else wants to serve it. Worldcom reportedly started shopping its consumer division months ago, but it has yet to announce a sucke...uh, buyer for the unit.
Normally I wouldn't care one way or the other, except that as telecom giants pull out, those enjoyable rate wars will subside. I won't miss ads with irritating celebrities, but I do like knowing that if I can't get 5 or 7 cents per minute from Company A, I can always get it from Company B or C.
Actually, there is one familiar segment that wants us: the Baby Bells. Talk about coming full circle -- 16 years after the original AT&T breakup, SBC Communications (NYSE: SBC) now crows about gaining 10 percent of the Texas long-distance market in just one quarter.
I could even go so far as to say that SBC wants me in particular. A polite lady called me last night and identified herself as a representative of "Ameritech, your local phone company."
She apparently didn't realize San Francisco residents have telephone bills that say "Pacific Bell" at the top, but maybe SBC Communications (NYSE: SBC) is trying to save money by not training its telemarketers. At least "my local phone company" (whose corporate headquarters happens to be in San Antonio) keeps me and my wallet in mind.
The gesture wasn't enough to convince me to spend $99 for the cordless phone being hawked. But it's comforting to know that somebody wants my money.
SGI (NYSE: SGI). "You're on crack" someone told me after reading a 2HRS column a couple of weeks ago that suggested the workstation vendor might have better days ahead. But after talking to Hal Covert this morning, I see no reason to change my mind.
It's not that Covert, who took the CFO position at SGI not long after he joined Red Hat (Nasdaq: RHAT), said anything different from his statements at the last couple of analyst conference calls. But he's taking a practical approach that suits a long-battered company.
To be sure, Covert will boast about the technical superiority of SGI's Origin line, but you have to expect that from all executives; it would be more worrisome if they didn't talk up their product line. At least Covert's fiscal targets -- 15 to 20 percent in the second half of fiscal 2001 -- are reasonably conservative. And he's not asking investors to dive blindly into the stock; he knows SGI has a lot to prove. "I have no problem with the 'Show Me' approach," Covert says.
Incidentally, this should be a good test for the claims of Oracle (Nasdaq: ORCL). Part of SGI's turnaround plan calls for cutting $100 million in annual costs, a target Covert believes can be reached largely by standardizing the company's ERP systems on Oracle. People tend to take Larry Ellison's hype with skepticism, but if his software suite can revitalize an operation as badly beaten down as SGI, it would be an achievement worth noting. 22GO>