Through TheFLY's Eyes: Broadband
from Theflyonthewall.com










Broadband Is The Real Commodity

The Great Gretzky used to say: "You have to skate where the puck is going to be." The same is true for investing: buy what is going up in the future, not what has already gone up.

What is the big commodity of the future? Bandwidth

* IP traffic is growing about 70% per year. Oil grows about 3% per year
* Standard TV uses 450x the bandwidth of an email. High definition TV uses 3,000x the bandwidth of an email.
* About 50% of Internet traffic is video peer to peer.
* 20% is streaming video and music.
* YouTube.com posts 20,000 videos per day.

As the stock market corrects, the companies poised to have strong earnings growth in the second half of 2006 are bandwidth-oriented companies. Forget the old economy names and get back into the new economy names. The email of the future is sharing big files on peer-to-peer platforms. This will use up all the bandwidth that was built in the late 1990s.

Investors can play it from both the equipment and network sides. On the equipment side, the big name is Cisco (CSCO). Some of the smaller names that are beginning to report good results are Applied Micro (AMCC), JDS Uniphase (JDSU) and Power One (PWER). On the network side, look at the pure IP players such as Level 3 (LVLT), Qwest (Q), Broadwing (BWNG) and Time Warner Telecom (TWTC).