The past three years have been a challenging time for investors in the Networking and Communications vertical, particularly those focused on the small and mid-cap sectors.
Healthy skepticism on our part allowed us to perform better than most in this area. But trying to attract investor interest to a sector where the average annualized loss over the past three years was -38% (compared with the -20% for the NASDAQ) has become impossible.
I firmly believe (barring further macro-economic destruction) that the wireline carrier component and equipment business is near the end of its secular decline, a reversal resulting from a decade of record-low carrier capital expenditures as a percentage of revenue. The next decade will be ruled by the companies that build real things, generate measurable value, and provide the productivity multiplier needed for legitimate growth. This sector fits that description.
Certainly many of the companies in this sector, particularly smaller ones and poorly capitalized ones will not survive. Liquidity will matter more than technology during this transition.
Nyquist Capital will be a casualty.
I want to thank each any every one of the people who took the time to read, comment, and critically disagree with everything written here. Creating the content within sharpened my mind in a way that made me both a stronger thinker as well as more aware of my cognitive biases. I especially want to thank our clients for their trust and two-way communication of ideas.
I am very lucky to be joining the excellent team at Infonetics Research, and to work closely with the founder Michael Howard. I will be taking over coverage of Optical Equipment as well as identifying new areas to provide services to Infonetics customers.
Thanks for Reading, Goodbye, and Good Luck.