Shake Out, Rattle and Roll
funny thing happened on the way to endless prosperity. The roof caved, crushing
many an upstart.
But with any disaster, rebuilding begins immediately. And so it is in the
telecom industry, which has been hit hard in this current economic downturn.
However, during the February CompTel (www.comptel.org)
conference and exhibition in Orlando, Fla., cautious optimism reigned. And why
not? The show floor was a sellout. Deals were being made. Products were being
More importantly, companies attending the show let it be known that they
still are getting investment funds.
While it is true that it is not as easy today to convince venture capitalists
to gamble big bucks on fledgling firms, regular announcements are being made
regarding multimillion dollar, second- and third- round funding.
What is obvious in these announcements is that a shift has occurred in
investors’ willingness to part with their dollars. The seemingly automatic flood
of bucks for dot.coms has dried up. Investors now are shopping around and
spending more wisely. Their dollars are going strategically where the industry
needs investment help.
It was refreshing to see the smiles and hear the success stories from the
representatives of companies laying dark fiber, developing softswitch
technologies or introducing the kinds of value-added applications that focus on
services such as VPNs, web hosting, data storage and unified communications.
A common theme now ties the investors with the companies that are receiving
investment funds. According to observers watching the doling of dollars, today’s
recipients all have careful business models with reduced risks. In other words,
the investment dollars are going to companies that certainly look as if they
still will be here tomorrow.
Because of this, the dark clouds of a potential economic recession did not
hang over this conference. Instead, companies appeared relieved that they can
see a financial upswing in coming months.
The Wall Street and financial analysts who have been saying the current
situation is simply a needed adjustment–a shake out–appear to be correct.
The good news in all this is that the economic roller-coaster ride is nothing
new. The nation’s financial history is littered with examples of investment ups
and downs. Sometimes it simply seems that venture capitalists are to eager to
embrace the "hot" technology of the moment, only to inflate its value.
The true barometer of how well the economy is doing comes after the shake
out. All indications appear to say that once the industry rattles off the dead
weight, it’s going to roll forward with great gusto.