The folks over at Cowen & Company have a novel theory about the future of satellite TV. The research operations has a "neutral" on Echostar (DISH) and DirecTV (DTV) with price targets at about the point where they trade now.
But, the backbone of the analysis assumes that Wall St. can know how the video market will look in 2010. Cowen claims that AT&T (T) and Verizon (VZ) will do so well at marketing video to consumers that "We expect telecommunications companies to gain up to 20 percent share in the 38 million homes served by 2010," according to an interview with The Associated Press.
There is nothing wrong with making predictions about things that will happen three years in the future, but it is probably a horrible way to make investment decisions. The Cowen theory does not say much about what will happen with cable or why it thinks that satellite TV and cable will lose so much share. Maybe the big telephone companies will give their service away.
Nice reading, bad advice.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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