BOSTON, Dec. 14, 2003 (PRIMEZONE) -- It's no surprise to Paul McWilliams or readers of his investment newsletter, the pmcw Report (http://www.pmcwreport.net/), that the world is close to a digital multimedia revolution. McWilliams coined the phrase "TriMedia" back in 1998 to describe what he saw coming. TriMedia is "the delivery of video, voice and data over a single Internet Protocol broadband pipe."
The FCC is currently deciding how to classify and regulate VoIP (Voice over Internet Protocol). How this is done will influence how quickly TriMedia spreads. Named as one of SmartMoney's most influential investors of 2000, McWilliams believes the committee has the very important task of balancing necessary regulations with the need to maintain a competitive environment.
"I don't feel VoIP will completely escape regulation nor do I feel it should. However, I think the regulatory environment for TriMedia, not just VoIP, needs to be radically different from the patchwork quilt of federal, state and local regulations that is used to govern telecom. With the proper regulations, all the interested parties stand to gain. However, if not done correctly, all parties will lose to at least some degree."
In his report, he commented on the various economic, structural and regulatory impacts as well as potential ways to profit from the upcoming changes.
McWilliams predicts that the big suppliers like Lucent (NYSE:LU) and Nortel (NYSE:NT) will probably lose as much traditional business as they pick up in new VoIP business. "These companies will probably enjoy modest revenue increases next year, but their upsides are more based on improving profit margins than on increasing revenue."
When asked about the smaller players in the space McWilliams commented that, "Sonus (Nasdaq:SONS) and Verso (Nasdaq:VRSO) have run quite a bit and are valued too high for my taste."
He sees switch vendors like Cisco (Nasdaq:CSCO) and Juniper (Nasdaq:JNPR), "enjoying continued demand, but I don't think VoIP, in and of itself, will make a huge difference to their bottom lines."
"Harmonic (Nasdaq:HLIT) and Advanced Fiber (Nasdaq:AFCI) are both interesting plays, however, neither is a pure VoIP play. We currently own Harmonic in our model portfolio at an average price of $1.11 for a gain of nearly 600%. I believe it presents an attractive long-term opportunity below $8."
He also keyed his subscribers on a VoIP play that will grow revenues and profits by over 30% in 2003 and has 77% gross profit margins.
McWilliams sums it up by saying, "VoIP and TriMedia are coming, but not without pain and politics. As you can see, it's hard to find undiscovered pure VoIP companies. It's a one of our favorite topics and we'll certainly continue covering the space."
Since its September 9, 2002 inception, his report's equity portfolio has returned a staggering 273%, well outdistancing the Nasdaq's 49% gain.
Samples of his ideas include (with maximum potential gain since the idea was presented):
-- Corning (NYSE:GLW) gained 95%, Ciena (Nasdaq:CIEN) gained 50%, and Tellabs (Nasdaq:TLAB) gained 40% since his March mentions
-- SafeNet (Nasdaq:SFNT) gained 88% since his April mention
Those interested in reading his detailed VoIP report and recommendations can sign up for a free thirty-day trial to his service: http://www.pmcwreport.net/join.php3?refer=PZ15
About the pmcw Report
The pmcw Report is a subscription financial newsletter managed by semiconductor veteran Paul McWilliams and Raging Bull co-founder Rusty Szurek. Members enjoy daily postings, economic updates and a model portfolio (equity positions up 273% since inception).
To learn more please visit: http://www.pmcwreport.net/join.php3?refer=PZ15