Toad680

How Will the NBBI Stimulus Affect Small and Medium Cap Communication Stocks?

Fair enough. My use of EV is based upon my own experiences and desire to put everything on an apples to apples basis before I start to consider other factors like margin structure, cash flow, break-even point.

Given that we are also looking at companies in a steady state that are all about to be exposed to a similar catalyst, it helps to get a sense for the cost of the enterprise, because that can then be compared to the relative impact from the catalyst, which in my mind is the best measure of the delta here and of which stocks are likely to do better than others. For instance, if two companies with similar margin structures will get an incremental $50 million in business from the stimulus, but one has an EV of $25 million and the other of $250 million, There is clearly a lot more leverage to the stimulus for company 1 than company 2.

But you are right, there are a lot of ways to skin a cat and it's not worth the time to debate the appropriate technique.

What I like about Tesla's post is that he is starting to go down the road of measuring market share in the markets in which the stimulus will be spent. We know $7.2 billion will find its way into generally underserved areas for broadband. Some have suggested that the methodology for distributing the funds will actually leverage what is being handed out and result in up to $14 billion being spent. So somewhere between 7-14. Fine.

Can we then break down the total dollar amount to the likely markets in which it will be spent ie access equipment vs laying fiber etc? We could then get a sense for the dollar amount going to specific market segments. Compare that to current market share in those segments and we will have a pretty goo idea of the company by company impact of the stimulus.