Jim Seymour
Interesting stuff happening in telecom right now. Maybe even investable stuff.
comments at the Merrill Lynch Global Telecom conference in New York Wednesday were unexpected, and unexpectedly positive, and gave some investors hope. So WorldCom (WCOM Quote - Cramer on WCOM - Stock Picks) jumped. Irrational? Maybe not. Even in the darkness of a four-digit Dow
, there are some companies offering glimmers of a turnaround in operating results. I think WorldCom may be one of them. Yesterday, on a
genuinely ugly Wednesday, WorldCom actually closed up more than 8%, on about twice normal daily volume, after Ebbers told conferees "business is doing extremely well. We're not revising guidance. We stick by our guidance. We are not going to miss it." And, "The first quarter is going extremely well." This is not as nuts as it may at first sound. Ebbers has been calling for 2001 full-year revenue growth of 12% to 15%. That's not flashy in terms of the kind of year-over-year growth we used to hear about from big tech stocks, but it would be darned good continuing performance for a telecom player like WorldCom. Especially right now. AT&T (T Quote - Cramer on T - Stock Picks) is going nuts chasing rabbits down blind alley after blind alley. Sprint (FON Quote - Cramer on FON - Stock Picks) -- more about it in a minute -- really wants to talk wireless. The regional Bells don't know what to do. Meanwhile, WorldCom is seeing strong results here and in Europe. Maybe it's the one with the plan. Ebbers said Wednesday that the company is intensely focused on its previously announced bifurcated plan: Push cash-cow consumer voice and Net access, using its consumer brand, MCI, while pushing even harder on making WorldCom a bigger player in corporate America. And, of course, spinning off the consumer side to shareholders in June (which Ebbers said is about on schedule). A real possibility: Ebbers is shining up the grille, washing and waxing the car and putting some rubber dressing on the tires of this buggy before trying to sell it later this year. If so, so what? I think he's going to push WorldCom -- which closed Wednesday at $16.44 -- to more than $20 by summer. Which makes it a nice buy, if not a potential rocketship, now. Item 2: Sprint Wednesday rolled out its plans for a consulting group aimed at helping large companies go wireless. I'm a big fan of the notion of the "wireless enterprise." Moving big chunks of corporate business off desktops and off notebooks into the world of pocketable wireless devices is going to be one of the big stories in computers and corporate IT during the next decade. Today, corporate IT departments often display outright hostility toward their personal digital assistant-using employees. No tech support, no nada. That's going to change. Making it possible for salespeople to easily use a pocketable wireless device to check an account's status on the company's credit watch list, or to check in-stock status immediately on an item a customer needs now, will be a hallmark of the well-connected company before long. Big problem: How do you build all these enterprise wireless systems -- the critical back-ends to support these newly freed-up workers? We can't look to small players like AvantGo(AVGO Quote - Cramer on AVGO - Stock Picks), which have so far been in the spotlight in business wireless-PDA stories. Big companies want big-company providers behind their wireless-enterprise systems. They want scale. They want the impression of permanence. And that's what Sprint said Wednesday it wants to deliver. I think it's a smart bet. Sprint isn't alone here. IBM (IBM Quote - Cramer on IBM - Stock Picks), Electronic Data Systems (EDS Quote - Cramer on EDS - Stock Picks) and other big shops are after this market, too. But I think that what Sprint is calling its Sprint E|Solutions Enterprise Mobile Practice (gotta find a nice acronym for that!) can be a major revenue-generator. Not tomorrow, but before much longer. At $20.56, down about a buck Wednesday, Sprint looks cheap enough now to start accumulating. Its fourth-quarter net income of 41 cents a share edged the First Call/Thomson Financial consensus of 39 cents, which was encouraging. Looking ahead, Sprint said last month that it expects 2001 earnings near the low end of its earlier prediction of a $1.65-to-$1.75 range, though it sees first-quarter results in only the high 30s, as opposed to a First Call 44 cent forecast. So it sounds like you don't have to jump in right now: The stock may languish a while longer. But Wednesday's announcement was the first real sign of life since Sprint began moaning and whining about its lost WorldCom merger last year, due to regulatory issues. Sprint may be getting back on track. Big trend? Perfectly clear? Nope. But at current prices, some telecom investments may be creeping up off the floor, and finally out of the "ludicrous" category. Worth taking a new look.
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