Run for the Roses

As I write this, I'm getting ready to head for the Twin Spires of Churchill Downs for the 2000 Kentucky Derby. For weeks, I've been studying the breeders, the owners, the trainers, the politics, the history — virtually everything I could lay my hands on to educate myself so I could pick the right horse.

Wireless-service-provider stocks remind me of the field of contenders I'm apt to see at Churchill Downs. In order to participate in the fastest two minutes in sports, these thoroughbreds need to have good bloodlines, strong work ethics, enviable and measurable track records and impressive workouts closing in on the first weekend in May. The same applies to service providers. Their stock performance depends on their network capabilities, good subscriber postings, notable success rate at holding down churn and excellent performance leading up to the IPO.

Of course, all of these elements only offer the horse and service provider a run for the roses. They don't guarantee the ultimate victory. All eyes recently were trained on the AT&T Wireless Group as it launched its IPO (stock symbol: AWE). The company's stock performance reflected not only the confidence of Wall Street but also the support of consumers who were or could become its subscribers. The performance also made a statement about the future of wireless communications.

For the company, in particular, there have been more than a few industry whispers since the departure of long-time wireless veteran Dan Hesse, after the elevation of John Zeglis to AT&T Wireless Group CEO. Those whispers multiplied as a blanket of quiet covered the company known for making noise and setting the pace with such deals as Digital One Rate. You can't stay at the No. 1 pole position by resting on your laurels. Many watchers wondered when the 1-time champ would move from a trot to a gallop. Fortunately, the results of the IPO were impressive, making AT&T the Seattle Slew of wireless IPOs. It has generated enough for the company to earmark $4 billion for capital expenditures, all but guaranteeing that there will be some noise from this company just around the bend.

This all bodes well for the company recapturing the hearts and wallets of future subscribers. More importantly, the IPO performance bodes well for the wireless industry at large. It has been a while since this much overall confidence has been expressed in our industry. In the mid-1980s when cellular seemingly could do no wrong, it was dubbed Wall Street's darling. However, over time, the shine on wireless was dulled by the dot-com revolution. Wireless is repaying the compliment by dragging the spotlight back now that the dot-coms' bubble has burst. It's likely to stay there because wireless companies have track records and revenue lines.

As for all of my Kentucky-Derby training, I realize it's all just a crapshoot. In reality, it all boils down to the weather, the field, the track and many other uncontrollable elements that can be classified as pure luck. The favorite could stumble and never recover after coming out of the gate. The jockey could instruct the horse to go full out too soon. Or the horse simply might not be ready for the spectacle of a major competition.

In the last 30 years of races at Churchill Downs, only five of the leaders out of the gates have actually held the lead and gone on to win the Derby. It confirms what we've always suspected about having not only speed but also endurance. Anecdotally, if you apply that same consideration to the wireless race, this very important IPO could imply huge possibilities for companies planning IPOs in the future, especially as the wireless Internet becomes a reality for consumer masses.

It also confirms one other fact. Speed to market is important. However, the real winners will be those that also have the "legs" to make it down the stretch.