Which signs should a person pay attention to in today’s crazy stock market?
Wireless companies haven’t fared too well from the looks of RCR’s StockWatch the last few weeks, although the stocks RCR follows have started to rebound from their low Oct. 7.
Several stocks are trading below a dollar. Yet telecom equipment manufacturer Tellabs this month reported the highest sales for any quarter in the company’s history. And a management recruitment company says 72 percent of telecommunications executives with responsibility for hiring plan to increase their staffs. (That figure is down two points for the first half of the year, but still above the industry average of 56.5 percent).
To me, those contradictory terms explain the wireless industry in a nutshell. The immediate outlook isn’t as rosy as it has been in the past, when the stock market was up, up and away. The Asian flu affected wireless companies in a big way, and the effects of that economic downturn probably will continue to haunt companies for some time.
But telecom-and particularly international wireless telecom-will be one of the first industries to bounce back when the global economy picks up again. Telecom no longer is a luxury, and wireless is still one of the cheapest ways to connect to the rest of the world.
Is wireless communications considered a luxury in this country anymore? When the U.S. economy downturned a little in the mid-1980s, the cellular market still grew. And cellular phones, while they were used as business tools, at that time carried the perception of being a luxury item.
I doubt today my 17-year-old nephew would think the family’s cell phone is a luxury the family would cut out quickly to save a few bucks. He thinks it’s essential since the family has had it since he got his driver’s license. If he’s going out for the evening, he knows he is supposed to grab it when he hops in the pick-up. His parents consider it a safety tool, and it brings them much peace of mind on weekend nights.
Would people be quick to drop cell phones if the economy drops a little? Let’s hope we don’t have to find out. But if we did, I’d bet a substantial number of people would cut out the cable bill before the wireless bill.
