HI there,

After the announcement that Intel had purchased a substantial stake in GPacket, it doesn't seems like the stock manage to attract any upswing to its price. With its plan to roll out wimax services in M'sia by June and *fingers crossed* no news of it postponing the plan either. I'm wondering if any body had bought the share and take a gamble on it?

It just amazes me that the share price did not move up by much after the announcement. Did you guys saw something fishy that I don't?

The share didn't move up because:

1: Intel just make RM50 million in Green Packet is because they are eyeing for development in Wimax technology. They are not investment bank so their investment is not meant for share appreciation in GPacket.
Also, the particular invesetment by Intel doesn't mean GPacket profitability will rise in the future, in fact has not much relationship.

2. Goldman Sachs is heavily disposing its stake in this company recently.

3. GPacket lastest financial result is in red. <--- this is the most influential factor in stock market.

Investment in stock is for future profitability of the company. So generally share will only move if something investment or development that will boost its future profitability.
Until now, the delay of Wimax deployment won't be good news for the company.

Just my 2 cents on the stock market behaviour on how to see from the investment perspective.

Above statement has nothing to do with any recommendation on the company. Judge your own, and buy/sell on your own risk.

This post has been edited by cherroy: May 31 2008, 02:19 PM

jimmyttl,

A simple question. Why do you think Gpacket can make money from WiMax service?

1) Why do you think that people will buy their service??

A) Cheaper??

B) Faster?

C) Better?

2) Why do you think that Gpacket can make money from the service?? Please note that Malaysia has one of the cheapest 3G service in the world??

Dreamer

cherroy,

saw the newspaper clip that goldman sachs had reduced their holdings to a mere 5% but another Datuk from some other company is snaping up the shares they sold. But I guess Intel would only invest rm50 million if they foresee a substantial return from it and the reason its financial result is in the red is because of the initial investment in rolling out the wimax service.

dreamer101,

have friends working in maxis and they said the internet service based on 3g connection sucks big time and connection speed + coverage is a main issue here, but i'm not sure about the speed of the 3g services provided by celcom though. developed countries only started using the wimax technology recently so I would not say it will be profitable for sure but gpacket claimed its wimax coverage can cover up to 80% of the population base (note population base & not geographical area) and I believe going wireless is cheaper than laying down cables for a broadband (m referring to TM) in the long run. GPacket even hired former TM streamyx's division president as its staff overseeing the wimax department, mind you it is that guy who laid the foundation for tm's successes in streamyx (in term of marketing & sales).

I'm not sure bout the price and I can see why you asked so with celcom & tm bundling their services together but with wimax tech based on a an enhanced version of wifi frequency, I don't expect any problem with speed. :-) I myself is no tech genius though. lol.

To sum it all up, if the statistics provided by gov is true, broadband penetration is sitll less than 20% (out of all the internet users) so I see potentials here.

Besides the divestment by goldman sachs & its financial standing in red, any other news worth to be noted huh?

thanks for participating in the discussions.

to be frank, I'm taking a gamble with this stock, high risk high gain you see =) this is what tech stocks are all about, bout still, it's worth digesting all the risks surrounding it.

uhh.. if its not priced right.. they wont work..

and while TM is rolling out the HSBB and trying to outreach as many as possible, it might be bad for 1P (or GP).

and i think 1P is rolling out in sbah swak.. so am not sure the take up rates over there..

jimmyttl,

1) I think the unlimited 3G service is RM99 per month. So, Gpacket's WiMAX service has to be cheaper or at least the same price.

<<I believe going wireless is cheaper than laying down cables for a broadband (m referring to TM) in the long run. >>

2) Yes and no. TM do not have to pay for the cable. The cable cost is FULLY amortized fro Streamyx.

http://www.theedgedaily.com/cms/content.js...276a00-fd8cb43a
3) For the new HSBB? project, the government is giving 4.8 billions to TM for the project.

4) For the 3G network, the network had been deployed. TM/Celcom/Maxis can lower their price at any time to kill off any new entrant.

So. what makes you think GPacket can be profitable by deploying a NEW network and charging for RM99 or less per month?

What is the business model?

Dreamer

A lot of company (especially on technology sector) invest small sum (For Intel to invest 50million is just like individual spending RM50) for technology development in certain company is not because they want to see the 50 millions can grow but to participate and have access and inside of the technology field that could help its core business future development which is their primary objective. May be they want to embedded the Wimax connection in their chip or whatever in the future, only they knew their primary obejctive of it. As Intel is not a investment bank, they are not the one aim for capital appreciation through buying company stake or investment but Goldman Sachs, JPMorgan etc do.

Intel might able to recoup the RM50 million even more through its chips future development related to Wimax later on as from investment in Gpacket experience but not necessary through GPacket. They can merely using Gpacket as their platform of testing or development, doesn't mean they want to recoup and gain through Gpacket. That's the different and market generally view this way.

Their primary concern is not on the 50 million investment return, got return surely good but it is the their primary objective.

Don't mean pessimistic about the Wimax or Gpacket itself but just highlight several challenge on this field based on financial view:

1. High initial capital expenditure (as you mentioned which result company turn into red), which return not yet known. FYI, in accounting standard, spending Rm1 on capital expenditure doesn't mean Rm1 loss. But loss on through depreciation on the capital invested. So company financial turning in red significantly does cause some concern, although not alarming.

2. Gpacket is not the sole Wimax service provider, there are 3 competitors (if not mistaken gov give out 3 Wimax licence). If it is a sole provider then it is good. Then you have to compete with 3 Wimax provider + existing broadband provider like 3G, streamyx.
Also the delay depoloyment of Wimax doesn't do any favour for the company especially financial result already turn into red.

3. Economy of scale is not that big for broadband in Malaysia because of population and average per capital income.
Yes, Malaysia still has low broadband penetration, but you have to consider a lot of lower income group that not afford it if monthly charge of more than RM100 especially kampung folks, sorry no offence. So 20% is not an accurate figure to show potential customers to be tapped because those rural kampung being included in the statistical count.

4. Broadband market might half saturated. Although as mentioned penetration is low at 20% but as said those who want and afford to have broadband, at least have one already. So whether they will take up Wimax with existing broadband like Streamyx still remain a big question, also you have 3G service providers also.

Just some view, doesn't mean Gpacket is not good or have no future. Instead, if the company can penetrate with high take-up rate and being dominat (like Maxis in HP), then its share might have tremendous future. Personally don't view has very good chance because of TM in place, anyway just personal opinion.

There are some serious challenging issues need to overcome mainly from economical of scale for the company to register signficant gain/profit from it. I don't know how much subscribers they need to capture to have a breakeven point, something interesting to find out also. But for sure on pricing side, they will face a lot of challenge.

I do think the main competitor/(obstacle) will come from TM because of monopolise in tele infra-structure.
Streamyx pricing and some 3G price (TM through Celcom) being lowered that can kill a lot of competitor and drive away potential customer as they have the economical scale to do it especially to fence off new telco or broadband providers.

I think it is good that you are aware of risk of it, yup, high risk high gain/loss particular in technology growth stock, no doubt about it. But if for short term speculation (as you said you took a gamble), long term future of the company has not much to do with it but share price short term movement does.

It is important don't try to mix speculation for short term with company long term future. It won't work well most of the time one. Especially on Intel investment in GPacket, don't take this kind of news to justify stock investment, it won't work well, that's why its share hardly move with this kind of news. Instead if it is Goldman Sachs investment in it rather than Intel, then different story.

Cheers.

This post has been edited by cherroy: Jun 1 2008, 07:33 AM

dreamer,

what makes you think it won't be profitable then? I'm sure the financial analyst hired by them would have done the required calculations and risk assesment as we are talking now. You're right, either they price their service at rm99 or lower or they would not be able to compete with the other 3 giants in the industry. But by the time they reveal their price, I believe the share prices would reflect the actual value of it already, just thought of speculating on the potential movement of the price before hand

Cherroy,

you never fail in giving out constructive comments. Yes, the CEO state that at best they can only reocup the initial investment by 2011 or 2013 and till then we are only gambling on the odds of it taking off. Tech stock is simply hard for us to judge, unlike other traditional stocks. There's simply no standard method of evaluating their investments and return.

Although there are 3 other wimax licensees, 1P itself will be the first move in that spectrum, it has its advantages and disadvantages. With the other 3 not coming out with anything concrete (I believe they are just taking the wait and see stance in the mean time), we can just say that they won't be a proven direct competitors in the near to medium term. But like I mentioned again, the 3 giants in the industry are (I'm just curious as to when DIGI will be rolling out their 3G services, DIGI is always the dark horse, coming out with innovative products all the time and I'm already speculating on digi's price before it rolls out its 3g services. lol).

Regarding the saturation of the broadband market, am a little worried about it too. There's direct linkage between economic prosperity and consumer spending, if economy turns out to be so so this year, I believe it will have some impacts on the adoption of wimax by consumers too.

lol. you're right, rm50 million is peanuts for Intel. noted there.

cheers guys

mm, you seem to be so determined to get into gpacket now..

so were you merely just sharing your idea or what?

with 3G, one provider tat can roam all over in msia, i don't see any reason why would i need wimax, seriously..

1. WiMAX has clear advantage over 3G because the cost of implementation is relatively inexpensive over 3G. Therefore, WiMAX provider would able to provide affordable services to subscribers.

2. WiMAX covers huge distances compared to 3G.

3. There is a flaw in the argument itself, because 3G is originally intended as mobile phone technology targeting cellphones, PDA and handheld devices to access Internet. However, there are also demands from mobile users (including laptop users) to access Internet using 3G network. So, crossover device like 3G data card is rolled out for users to surf internet using 3G network. By right WiMAX should be compared against WiFi not 3G.

4. Anyone here surfing Internet using 3G network on laptop? well, not much because you need a crossover device plus expensive monthly charges and within limited 3G coverage.

5. To TS, there is potential for WiMAX in Malaysia or else you wont see 1P investing in WiMAX infrastructure, followed by other mobile service operators. Also take note there are also a lot of uncertainties in telecommunication arena.

I m not into these, but those interested should read more.

jimmyttl,


If you have gone through Internet bubble and Telecom bubble, you would not have make this kind of statement. In some cases which may or may not apply in the case of GPacket, company do things to sell share. It is NOT to make money.

Vv.SoViEt.vV,

1) What makes you say so??

2) Law of RF physic applies to ALL wireless technologies. Since WiMAx and 3G run approximately in the same frequency band, they cover the same distance.

5) How many failed Broadband Wireless projects that we had in Malaysia over the past 10 years?? Many.

Dreamer

mind to elaborate more on the internet bubble and telecom bubble you said earlier? as far as I know, those events are something akin to the tulip bubble faced in holland and I don't quite understand it. Are you implying that news are made to sell shares? It applies to all stocks in general I assume and with no stocks being issue in the short term. I see no benefits in raising the profiles of the company now.

but to summarise it all, dreamer101, you're saying that 1P's stock is not viable now because you see it not being able to compete with the other giants in term of cost and coverage and the news out there about Gpacket are just hypes?

Coverage wise, I don't know bout 3G coverage but if Gpacket states that its coverage can cover 80% of population base, I assume it would be big enough then.

Anybody here familiar with wimax tech? like how big is its station? If Gpacket said it can cover such a big population base, I don't hear any news of it creating any transmitting station? lol or it just need a larger version of router to create the needed coverage.

Again, if 3G is sufficient, Paris will not adopt the wimax approach to cover its city in its pursuit of ICT improvements. I just need to know the pricing of its wimax and we should be able to see its viability.

Any more comments on Gpacket?

following the links are the views of the opposing camps.
http://nexttrade.blogspot.com/2008/05/gpac...xs-success.html
http://www.theedgedaily.com/cms/content.js...98eb00-66294695

nice seeing lots of comments in here

This post has been edited by jimmyttl: Jun 1 2008, 06:27 PM

How long the gestation period? GPacket supposed to be online next month,how many devices available now to be able to use wimax?
Also why is P1 pushing Izzi if they are going to introduce wimax? Isn't it a case of redundancy/cannabilising itself?

well, it's all down to pricing like i mentioned previously; however, you need to understand that in ISP, they need economy of scale to keep bandwidth cost cheaper, which P1 does not have, the starting period is crucial for them to determine their survivability.

who cares about technology superiority? 3g or wimax, to consumer, it's just a different word, as long as i can get online with fairly reasonable speed, i'm happy with it.

celcom broadband is doing.. last i saw a promo, rm66/mo? do you think p1 can do anything like that? not to mention we can go anywhere with it and get online as long as it's celcom territory, with comparing to p1's service that is confined to a location but it might be worth considering if they could arrange nationwide roaming against all wimax provider in msia for a nominal fee..

Well seems the future of Wimax still unclear in this country. A lot of pro and con argument on this share. I would take a wait and see approach for the time being on GPacket.

On pricing between wimax and normal 3G ..... at same pricing will wimax offer better speed ?


Technology is a unpredictable ....we would not able to predict what happend 6 months down the road. The other Wimax competitor might suddently come out with a plan that can kick ass.

Broadband penetration in M'sia still slow in my opinion. Seems there still a lot people that hardly use the internet in their daily life. A lot of people i know hardly even use the internet even to check e-mail.

So for now just wait and see.

just my 2 cents

RED agains today...

it's rolling up again..

closed 1.62

Up 0.08

Results are a little mixed for the past few days. Still.. might sidetrack a little here, am wondering how bad the oil shock gonna affect bursa tomorrow.. Could just pray and watch my portfolio's value go down. Am seeing a drop by at least 5% tomorrow..bought another lot of digi today and pak lah sent me a bad news at 5pm..

1.60 now