FrankyW

That's actually hitting it right on the money. Many so-called hosting companies that resell Cogent, have done a very decent job in convincing customers that Cogent is not that bad. Well, let's take a look at the facts on the table.

Financially, Cogent is in shit. Aside from the fact that the business model is completely not targetted towards hosting companies, but more of wiring up offices across the nation (fast, cheap internet connectivity) which essentially would create pull traffic, that allows hosting companies to peer, hence drive the price down, hence somewhat meet the price per megabit Cogent is desperately trying to set as a standard.

Here is your problem. To accomplish cornering of ANY market, forget Telco, you need a company with clear direction (good management) and most importantly LOTS of money. Both of which Cogent lacks.

Now only does the company have a market cap of only $4 million with stock price down 40-50% in the last 60 days alone, they also don't have any revenues to report. At 20k per Gig-E line, how many of those do you think people need across the country? Say 50 (which is a very large number), that's $1 million per month. That's 12 million per year. Add that number to another 100 regular 100mbit links, and you have another 12 million per year or so. That's 24 million dollars per year, and we are talking about VERY GOOD averages. With the current economy state, I can assure you not many people are buying gigabits. And not many dot-busts need bandwidth anymore.

Now lets examine their financials using Netscape.net (Ticker Symbol: COI)
http://thomsoninvest.netscape.com/cg...r=COI&type=fin

Their return on capital is -21.4%, revenues total ONLY 3 million per year, cost of goods sold $17million, which leads to a very interesting gross profit of only NEGATIVE 14 million dollars. Their volume today was a whopping 600. With an earnings per share of -$64.77, especially on a stock that costs $1.25, they are for sure extremely profitable.. to a negative point! Great! But nearly everybody out there thinks they just got a magically cheap way of delivering bandwidth on the net. The stock is now at 1.25, leading a company to a market cap of roughly 4 million dollars. With Cisco's $200 million dollar investment, you are talking about selling the company about 50 times over, just to get the investment back. Not in today's economy.

Get on the technical issue, and you have an even more interesting picture. Because Cogent's business plan is striving for more pull traffic, hence ability to more extensively peer, they push every possible bit allowed through PUBLIC exchange points, which are so full of traffic, your quality sinks.

I can go on and on, but it's really pointless. For more reading on Cogent, check out:
http://www.lightreading.com/document.asp?doc_id=9136
http://www.lightreading.com/document.asp?doc_id=15263

That is all

Frank ;-)