This article was originally published on August 6, 2014 and the ad is circulating again and sending a lot of questions our way. The same stock is being touted and teased, and the original article below has not been updated or revised… the stock teased is up by about 50% since it was first teased, thanks to a big “beat and raise” quarterly release in October, so it’s working out well so far.
I was reading the latest pitch for the “next Internet” and thinking that it was yet another spiel about the “Internet of Things” that we’ve covered so many times (like the Fool’s “The Internet Disappears” or Marc Lichtenfeld’s “Web 3.0” pitch)…
… or even about the “wearable tech” revolution that’s often likened to the “Internet of Things” — with the specialized little chips that everyone from the Fool to Michael Robinson believes will change the internet and the world.
But no, this one’s a bit different. Thankfully. Not that I disagree that the “internet of things” will be huge or that wearable tech will continue to advance, but I’m a little sick of seeing the same little chip companies teased over and over. Ray Blanco is touting the “Internet of Things,” sure, and also talking about how drastically different the next version of the Internet will be… but he’s not touting the next wave of internet sensors or internet-connected chips or wireless modules, he’s focusing on the vast demand for broadband that this “next internet” will create when thousands more objects are connected and transmitting data.
So he’s got a photonics stock to tease for faster fiber optic networks — one that he says has set a Guinness Record for their speedy networking, and that can transmit data thousands of times more quickly than conventional networks.
Sounds interesting, right? Well, what is it?
Now, now — before we get ahead of ourselves, let’s just see how it is that Ray Blanco gets our pistons firing for this idea. He talks about the “Mysterious billionaire” who got everyone excited about a “wealth event” in the next version of the internet back in January (that’s John Chambers of Cisco, who can’t tie his shoes without saying “Internet of Everything” and gave a big address about it as the keynote speaker at the Consumer Electronics Show in January).
And then throws in some more hyperbole:
“‘The biggest business opportunity in the history of mankind’
“Even Time has written about this, calling it the ‘next big thing.’
“In fact, they went on, ‘We’re talking trillions of dollars here, not billions.’
“There’s Business Insider, who says this could be, ‘Bigger than the smartphone, tablet, and PC markets combined…’
“And of course, Wired, which calls this same event… ‘The most monumental tech boom to date…'”
So that’s all about this “Internet of Things” still, not specifically about this company. Let’s start digging into the clues for the stock Blanco is teasing:
“What I’m guessing that you haven’t heard yet is why this huge phenomenon — worth a potential $19 trillion — might be in danger of not happening at all.
“At least, not without the breakthrough I want to reveal to you today….
“… there’s one very big [challenge] that must be overcome before the ‘Internet of Everything’… or even today’s crowded Internet… that must be dealt with first.
“I believe I’ve found the company that figured out how to deal with it.
“And it’s this company, I believe, that you’ll want to look at first.
“Preferably before you go chasing fortunes anywhere else in the exploding new ‘Internet of Everything’ marketplace.”
And yes, it’s all about connection speed, bandwidth and internet congestion:
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“If the Internet is a digital pipeline, bandwidth measures how much data can pass through it at any given time. And already that amount of available space is running out.
“If you’ve ever noticed a slower connection speed… videos that buffer… super-slow emails… or dropped chat connections with the grandkids… you know what I’m talking about.
“As the ‘Internet of Everything’ explodes from 9 billion connected devices… to over 75 billion… what happens then to those already crowded digital ‘pipelines’?
“And this is the huge opportunity.
“In fact, even if the entire ‘Internet of Everything’ wealth tsunami gets postponed by another year or more, this is where you’ll want to look for a potential tech market bonanza.”
So that’s the big picture argument. On to the clues about this specific company: