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Optical/IP

Hold the Foam

The Lucent Technologies Inc. (NYSE: LU) / Alcatel (NYSE: ALA; Paris: CGEP:PA) "merger" could be looked at as another depressing example of the takeover of a once-stellar American tech company, now fallen on hard times, by a foreign company. But it's also a product of the surge in telecom stocks that will make this week's CTIA Wireless convention frothier than it's been in years.

Like beggars admitted to a banquet, telecom companies are on a roll they haven't seen since... oh, 2001. The Goldman Sachs Networking Index opened this morning at $52.05, near its 52-week high of $53.08, while the S&P Global Telecommunications Index was at $36.80, just $0.48 off its one-year peak. Carriers like Level 3 Communications Inc. (NYSE: LVLT), device makers like Motorola Inc. (NYSE: MOT), and equipment makers like Ciena Corp. (NYSE: CIEN) are seeing big share-price gains, while the big service providers are logging healthy gains thanks to their wireless units.

Even Lucent itself, which early this year threatened to drift into penny-stock territory, has struggled back to the $3 level as an acquisition began to look inevitable.

With WiMax looking like it might actually become reality, the mobile-email market free for the moment of major patent disputes, and city governments cannonballing into the municipal wireless mesh pool, the wireless sector is enjoying a heyday that's also reflected in the readership numbers on Unstrung: Our traffic is up significantly since the fall of 2005.

Partly, this is thanks to our compelling (and expanding) editorial content. But any journalist knows that readership (or viewership) is driven by larger societal and economic trends. If you're putting out Rutabaga Monthly, and there are fewer and fewer farmers growing rutabagas, you're not going to be successful no matter how alluring your centerfold is.

So as I board a flight to Vegas in a couple of hours, it's a great time to be covering the wireless sector. I just hope that the groundswell doesn't turn into a bubble again.

— Richard Martin, Senior Editor, Unstrung

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