Nightmare on Telecom Street

To hear the analysts talk, telecom woes caused by excessive debt and overcapacity will make it hard for the industry to rebound next year. Gary Rabin, head of Telecom at CIBC, thinks that "Once the bankruptcies wash through the system, there’ll be a more level playing field with the survivors creating a lot of value."

Telecom heavyweight, Leo Hindery, believes that the industry's $1.2 trillion worth of debt will drive the U.S. economy into a recession, and that telecom is about to enter an era of "extreme consolidation."

Bankruptcies? Telecom recession?

Watching bellwether companies restructure, regroup, slash and dash, I’m almost tempted to believe that we could be in for a Bette Davis-like bumpy ride that lasts beyond 2002.

Another part of me, believes that it’s in the analysts’ best interests to prophesy doom and gloom. No one cares when they beat analyst predictions. However, they react poorly when analysts don’t predict the extent of bad times or project them out far enough, both of which happened in the last 12 months.

And yet another part of me feels as though this is a really bad dream. In this nightmare,Lucent’s stock has achieved junk bond status; Nortel, Nokia and Ericsson have laid off roughly 20% of their workforces; everyone has outsourced handset manufacturing; AT&T is being split into a million pieces...

Hey, I wonder if Bobby Ewing really died or not.