Earlier this year, GST Telecommunications, a similar competitive phone company, filed for Chapter 11 bankruptcy protection after running short of cash to fund its operations. And Cypress Communications recently announced that its revenues for the second half of the year will fall below expectations, sending the stock lower. Others, such as Teligent and Winstar Communications , which offer wireless local communications services, have seen their stock prices plummet over the past year to near new lows. Of course, not all of the competitive local communications and Net providers are foundering. A few have ambitious goals and have raised their target goals.
Some analysts believe the overall market continues to expand despite the high-profile stumbles.
But the recent rash of bad news, coupled with analyst reports questioning whether some providers will ever see a solid return on their investments, has raised fears that the troubles are not over. The ongoing concern about the competitive local phone provider market also raises questions about whether the equipment makers will be affected. But some analysts believe that, although several communications companies are curtailing spending, the overall market is growing so quickly that the gear makers will not be hurt. In a research report released last week, McEvoy predicted strong earnings reports from the broadband access equipment sector for the September quarter. Nevertheless, we believe demand for broadband access equipment remains robust.