Cramer: Reversal of Fortune, Part II
N E W Y O R K, Feb. 22 -- Imagine you were a salesperson at one of these three companies. You read that company after company after company "got funding" to build out its network.
That meant that your company had to get that business. These were giant pieces of business that were up for grabs.
Often the pieces of business were so huge and staggering that you had to compete on more than just hardware and software. You had to compete on financing. You had to make terms, give master leases, do what was necessary to get the business.
Salespeople at these companies saw the bonanza. They pursued every phone company, including some that didn't have funding — just a promise of funding — and they sold them equipment.
With so many companies raising money at the same time, and so much money available, it seemed that the good times would last forever. After all, we know that more and more data were being pushed every day, and if a company didn't order the latest iteration of equipment, it could be outclassed by others.
Suddenly, Last Summer
Then, last summer — yes, it was that recent — several warning signs occurred. First, GST Communications and ICG Communications fell on hard times. Oh, sure, you could say that ICG's problems were simply the shenanigans of bad management and that GST was a crummy company.
But if the industry were as robust as we thought, even the relentless pursuit of Vogue's Anna Wintour by Shelby Bryant (the super-slick salesman head of ICG) wouldn't have derailed things. These companies were having a hard time getting companies to pay — and getting new customers without giving away the store.
Second, the rollout of new lines, particularly high-speed lines, ground to an obnoxiously low level because the central office, where all lines have to go through, got filled up and the incumbents, the BellSouth,
Verizon, and
SBC Communications didn't exactly knock themselves out to help the alternative carriers.
Trending Reader Picks
ABC News Live