Analysts Remain Bullish on Wireless

Despite the recent stock-market volatility, analysts at the UWCC Global Summit 2000 expressed optimism for the wireless market even if most other technology stocks trend down.

"The fundamentals are still strong," said Alex Cena, Salomon Smith Barney managing director, referring to the insatiable demand for bandwidth and the continual migration to new technologies. He also pointed to the $35 billion U.K. UMTS auction as fueling future growth.

Citing multiple points throughout the bandwidth life cycle as catalysts, Cena said auctions always begin a ripple effect, driving up stock prices. Once the auctions close and the licenses are committed, stock prices make their initial move. As infrastructure and build-out contracts are awarded, stock prices move up again. When revenues begin flowing, the stock rises again. "Investors like to see these second directives," Cena said.

Cena was so bullish on wireless that he predicted investment increasing from its current $40 billion to more than $100 billion in 2004, thanks to worldwide build-outs and 3G implementation.

Tempering the euphoria was Frank Cappiello, "Wall $treet Week" panelist and author of four investment books.

"This volatility is telling us something," said Cappiello, who urged attendees to remember similar circumstances in recent history. Even though the current economy is vibrant thanks to low interest rates, vigorous growth, low inflation and corporate profits in the 8% to 10% range for the S&P 500, he said future trends will be decided by consumer confidence. He said this confidence accounts for at least two-thirds of stock performance. If confidence surges too high, Alan Greenspan will counter by manipulating interest rates. One wrong move could send the market into a devastating tumble, Cappiello said. In 1922, the country was in a huge growth surge, and the stock market was booming. In 1927, the Federal Reserve Board thought the stock market was too euphoric and raised interest rates. Despite several increases, the market didn't respond until one last 1/4-point increase.

Cappiello also compared today's U.S. economy to Japan's in the late 1980s, when the Nikkei Dow peaked at 39,000, and interest rates began increasing. Once again, the last rate increase broke the market's back.

"Once the consumer gets worried, the trouble begins," Cappiello said. "Alan Greenspan is in the fight of his life."

However, the analysts suggested that wireless proliferation has created an immunity from fluctuations.

"The economy will have no impact on phone sales" because phones are no longer a luxury, said Ed Snyder, Chase Hambrecht & Quist research analyst for wireless. Last year, 280 million phones were sold, making wireless phones the hottest consumer product segment for three years running. Snyder expects that number to almost double in 2000.

"Wireless will remain a very robust market, even if the stock market trends down."

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Ones to Watch

What's hot and not in today's market, according to Ed Snyder, Chase Hambrecht & Quist research analyst for wireless.

HOT: RF, Multimode, Multistandard, Bluetooth, GPRS, Data Tailored for Mobility

NOT: Cords, Single Mode, Standalone, IR, HSCSD, Shoving the Internet on Phones