Something to smile about

Today, as CLECs tried to work their stocks up the Nasdaq’s oiled wall, there was a guilty little smile popping up in boardrooms. SBC had to revise its forecast for 2001. Then, it got hammered like so many before it, taking at least a 13% hit.

That thing they were feeling is called Schadenfreude in German. There’s no direct translation in English, but the emotion’s there, whether or not our yoga instructors want us to admit it. It’s the smile that came over your face when you saw that kid who was just a little better than you at kickball slip and sprain his ankle. (The feeling you got when you actually tripped the kid is called something else entirely.)

And beyond just adolescent love for the pain of others, there was some sort of justice in what happened. At least that’s what I’m telling myself, and my analyst. The Nasdaq’s been falling apart, and competitive carriers have been taking the brunt of the hit. Sure, they’ve got some problems, most of which happen to be unimportant little trifles like earnings, financing and management.

But there’s more to this than simple Schadenfreude. Assuming that investors are paying attention to the markets and specific companies, and not just the all-powerful Greenspan’s words or non-words on interest rates. This may make investors realize that even some of the larger carriers are having problems keeping up with promised returns, which may restore some faith in the competitive market.

The real trouble isn’t with what’s been done in telecom. Maybe the issue is with what the industry thought could be pulled off. When people are willing to dump cash into untested new ideas, you start to believe that you can take over the world. But markets can’t move that fast.

Companies, and the future, take a little longer to build then a year or two. And even though competitive carriers’ and SBC’s estimated earnings were liberal, that was in part due to the general optimism and expectations of investors. It was only a matter of time before everyone got hit.

It could backfire. The biggest players could get torn to shreds, taking the smaller players down with them . And if that happens we’ll just have to get our jollies from watching them fall, even if it’s short-lived and shallow.

Upstart Staff Writer David Schober was dismissed from his elementary school kickball team for unsportsmanlike conduct. Write him at david_schober@intertec.com.