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- THE FRIDAY LETTER -
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for friends and subscribers)
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| http://www.gilder.com/ | Issue 285.0/March 2,
2007
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HEADLINES:
- The Week / A New Power House
- Friday Feature / Steve Forbes:
Unhealthy
- Friday Blogger Bonus / Broadband of Brothers
- Readings /
SPECIAL
OFFER
|
Gilder’s
latest picks celebrate swift gains |
The
Week / A New Power House
Tech Analyst Charlie Burger (02/28/06):
The emerging digital power market appears set to turn the corner next year, and
pioneer Power-One (PWER) owns the segment. With investors focusing on
this year and Power’s acquisition of Magnetek’s Power Electronics Group, the
stock is starting to look attractive for those willing to hold on for the
digital dawn.
Acquisition-induced
downsides drove Power to a loss to 12 cents during the fourth-quarter. That was
worse than management had expected, as was the pro-forma loss of 4 cents that
excludes one-time expenses. The company endured surprisingly low margins on
Magnetek’s custom lines, where products ramp much faster than in Power’s
tradition business; pressured by multiple projects in this new high-volume
segment, the company fell behind the learning curve.
We
warned of impending acquisition downsides in the December 2006 GTR and
wouldn’t be surprised to see a few more this year as the company continues to
consolidate manufacturing. But most of the bad news is probably behind us and
we now think Power can absorb Magnetek without dropping the ball on digital,
the potential problem that has concerned us most.
Also encouraging is management’s long-term vision. Though the new custom
products business could immediately ease Power’s overhead burden and strengthen
purchasing clout as the company transforms itself into the sixth largest power
supply vendor from the sixteenth, they are wisely foregoing some of these
savings this year and instead entering into long-term materials contracts which
will lower costs more significantly beginning next year. This has likely
annoyed traders who were anticipating a sharper drop-off in expenses.
Power expects to earn 25–30 cents per share in 2007 and to exit the year with
$150m in quarterly revenue and quarterly earnings of 10 cents. Probably few
seasoned investors believe them, but in fact, they may well do better.
Find
out why by logging on with your subscriber ID at http://www.gildertech.com/.
|
The Telecosm
Lounge |
Friday
Feature
/ Unhealthy
Steve Forbes (2/12/07): Arnold Schwarzenegger's proposal for universal
health coverage in California underscores the abysmal ignorance of so
many--including boatloads of business executives and entrepreneurs--about what
it takes to bring rationality, productivity and lower prices to the U.S. health
care market. The biggest problem is the disconnect between providers and
consumers. When the consumer has little control over a market, that market goes
haywire. The most vivid example of this, of course, is the now defunct Soviet
Union.
Instead
of covering catastrophes, most private health care policies cover
everything--after a relatively low deductible. The fact that the consumer has
no restraint in demanding products and services under this approach is a basic
flaw usually understood by most nonsocialist experts. But the other fundamental
flaw--that there is a lack of the kind of productivity we get elsewhere--is
not. The health care field is dominated by a cost-plus mentality.
It's
no surprise, for instance, that when MRIs first came along the price of the
procedure was well over $1,000. They are cheaper today--$400 and up--but not as
cheap as they should be. If you had high-tech-like productivity, MRIs would
cost under $100.
Under
today's flawed system, mandatory health insurance for all would guarantee a
rapid move to de facto nationalized health care. This would mean more money for
less health care--in other words, rationing via waiting lines. Innovation would
wither.
Alas,
the President's health insurance tax proposals are no solution, either--just
futzing around with a flawed system.
Health Savings Accounts in the U.S. are slowly gaining ground, just as 401(k)s did two decades ago. Catastrophic health insurance is relatively cheap--for most of us, a few hundred bucks a year. Properly structured, HSAs would enable employers to give a good portion of the high deductible to their workers. When people control the money, they endeavor to get more value for it, and productivity gains ensue.
Read
Steve’s complete commentary:
http://members.forbes.com/global/2007/0212/011.html
SPECIAL
OFFER
|
America's Secret Missile Deals Could Bank You 846%! |
Friday Blogger Bonus / Broadband of Brothers
Mike Walker (2/23/07): I have never met Smarter Broadband’s
founder, Adam Brodel. From speaking with him on the phone, I’d imagine he
might be English, but he certainly qualifies as what George Gilder calls “a
cowboy” …see, Gilder Technology Report, “Wireless Shootout: Suits Vs. Cowboys”
At Sunset Travel, we’ve hoed the long row from using old AT&T data lines to
having the county’s’s first operating DSL account. We’ve tried relying on
Verizon’s PCMCIA AirCard for web access, and even had NCCN’s staff all over my
roof (in August!) trying to align a receiver with their short lived antenna
experiment on Wolf Mountain.
But home and residence offices are in Hidden Valley, two miles south of the
Fairgrounds- in the middle of nowhere as far as the phone and cable companies
are concerned. The closest I was to getting broadband was having had Cat 5
cable installed while remodeling. How I’d actually, eventually hook-up was
anybody’s guess. Satellite doesn’t work very well with the maximum-security
systems of the travel industry. Internet over power lines, maybe?
About two weeks ago, I was amazed to see a “Smarter Broadband” sign on Hidden
Valley Road at Old Auburn. I called and Adam Brodel explained the basics, that wireless
broadband was up and running in the Sherwood Forest area two miles away. I
checked him out with a couple of buddies who always seem to be in the know
about ISP’s in Nevada County and he had good references, very good!
I ordered the service on a Tuesday and it was installed on
Thursday… This is what I’ve been waiting for since I read Gilder’s “Telecosm”.
Check
out Mike’s Broadband of Brothers blog:
http://ncerc.typepad.com/broadband_of_brothers/2007/02/first_person_pr.html
____________________________________
Readings /
Wireless Shootout: Suits Vs. Cowboys
http://www.forbes.com/personalfinance/2007/02/06/gilder-verizon-cowboys-pf-soapbox-in_nt_0206soapbox_inl.html
Stealing Starbucks' WiFi Customers
http://www.forbes.com/entrepreneurs/2007/02/23/fonbucks-wifi-starbucks-ent_cx_mc_0226fonbucks.html
The Weekly GTI
http://www.gtindex.com/
Mobile TV's Picture Improves
http://www.forbes.com/home/intelligentinfrastructure/2007/02/27/mobitv-video-phone-tech-intel-cx_df_0228phone.html
Andreessen's New Venture (video)
http://www.forbes.com/video/?video=fvn/tech/ms_ning022607
Flume Network Optimization Backgrounder
http://www.saratogadata.com/Flume/products_Flume.html
Microsoft Vs. Google: The Office Battle Is Joined
http://www.forbes.com/technology/2007/02/23/microsoft-google-software-oped_cx_0223blodget.html
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