Customer Reviews

Broadbandits: Inside the $750 Billion Telecom Heist

5 star:		(7)
4 star:		(5)
3 star:		(2)
2 star:		(0)
1 star:		(0)

 

 

It was the best of times (money flowed like water), it was the worst of times (in retrospect, for those who didn't cash out at or near the top). It was a great human drama, and unlike Dickens, it was all 100% nonfiction - it really did happen. For anyone in the telecom industry who lived through the bubble, and now the depression, for anyone who invested in the telecom bubble, or for anyone curious about one of the greatest financial manias in human history, I recommend Broadbandits.

Broadbandits profiles most of the key individuals and companies who helped inflate (and in many cases profit from) the telecom bubble, at a steady one company per chapter pace. Being in the telecom industry myself (still), I can state that Malik accurately captured the major stories I already knew, so I assume the rest of the book is generally factual. Although Malik focuses most of his anger on company bigwigs, he also admits that a bubble the size of this one could not have been created without active, willing participation from all sectors of the community: greedy disconnected CEOs, conflicted Wall Street and industry analysts, small investors who wanted to double their money overnight, and a unique confluence of regulatory and technological changes and advances.

Broadbandits could have been better. Malik's principle sources are business press articles, and he has a fascination with documenting dollar figures, so he doesn't probe as deeply as he could into the reasons behind the actions he reports. The book was written hurriedly (to keep it topical), and there are more than a few data errors. Malik correctly cites Ravi Suria's seminal report on the debt and finances of telecom firms, which proved how the emperor of telecom stocks had no clothes (I remember almost crying for joy when I originally read Suria's report), but he missed Jeremy Siegel's equally important bubble bursting op-ed piece in the Wall Street Journal proving that Cisco and other high P/E stocks were way overvalued and that we were experiencing another "Nifty Fifty" tech mania episode. Finally, to return to my Dickens reference, the book would be even more dramatic if it recounted more anecdotal stories and statistics of the small investors and employees who lost their money, retirement savings and jobs, to provide contrast to the well-documented stories of folks who cleared many millions during the boom. However, I do admit that with the title of Broadbandits, the focus is on the bigwigs who inflated and profited from the bubble.

One more minor quibble: two of the people who praise Broadbandits on the back cover are thanked by Malik in his Acknowledgements. Conflicts of interest are everywhere! And just what did Malik do during his brief stint as a venture capitalist?

Though much of the financial carnage associated with the companies chronicled in Broadbandits is well documented, I found Om Malik's coverage of the human element and motives involved to be both fascinating and illuminating.
His timing on publishing this book could not be better, given the backdrop of ongoing investigations and legal action against many of the companies or principals he writes about. I find it ironic that a number of these "visionaries" and "promoters" who were paid like kings because they were supposedly so invaluable to their companies or firms, now use as a defense that they really didn't know what was going on in their companies. It is amazing people like Bernie Ebbers who made literally hundreds, if not thousands, of presentations to knowledgeable investors, who ask insightful questions, could now make this claim. Also, where are the other research analysts on Wall Street. It is one thing for Grubman to be an active co-conspirator, but where was the independent research that should have debunked these charlatans before they got started. The easiest myth to debunk of all is the myth that the Internet was growing 100% every four months over a sustainable period and press releases that claimed dial port consumption was increaseing 10% per month. Any reasonably asstute person could do the calculations on this and realize that there are not enough people or information to sustain this growth rate for more than a fleeting moment. In a matter of a couple of years everyone in the US would have had to have been signed onto an individual dial port twenty-four hours a day. Om Malik makes it clear how phony these arguments are and how dishonest and disingenuous they are. Future generations will look back on this much as we look back at the Tulip Bubble in Holland and wonder how did anybody ever believe any of this. This is a great first book for Om Malik.

The latest run-up of telecom stocks -- for no reason -- is an interesting backdrop to reading this book, because you can see it all happening again. Malik's insights are deep and enjoyable, the pace comfortable, and the writing is engaging. While I can't say I enjoyed re-living the disasters in the telecom industry, I can say that it's something we all should do to avoid making many of the same mistakes. A great beach book.

Forget about bankrupt dotcoms, their Aeron chairs and foosball tables, this is the story of a REAL wave of capital destruction. It captures many nuances, the major (and minor) personalities,and the story of virtually every deal. Self-enriching "broadbandits" are the archetype for telling the story of capital markets gone haywire. As a practitioner in the industry, I knew this would be a thorough book when Malik recounts the story of Ravi Suria, a Lehman Brothers credit analyst whose report, "The Other Side of Leverage" was probably THE analytically definitive document of the crisis, way before the overall market had figured out what was happening.

This is a good read for those who want to know how cycles come and go in the economic world and how those in the right place at the right time with shaky ethics and/or poor strategic skills can get filthy rich. The sheer stupidity of investors, bankers and "yes men" employees is stagering and worth the price of the book just for this alone.

Om Malik provides an interesting view of the second bubble of the new century, although the book isn't a tremendous read. For anybody interested in the origins and ramifications of the broadband bubble it is definitely worth reading, but don't expect the book to be anything as compelling as Barbarians at the Gate, Conspiracy of Fools or Serpent on the Rock.

I enjoyed the book very much. Chapter by chapter Om Malik gives the reader story by story of leading companies during the late 90's early 2000's and how they were brought down. Thought painful, as I along with many lost money during this period it brings home many basic investment thesis and bubble philosophies and makes for great read.

This book explained things to me that even after following these stories over the last 5 years I didn't understand. I now know how all this stuff works, and why the bubble burst, and why my 401K looks more like a 101K. And, the book is actually enjoyable. I never thought reading about the people that stole my money could by so much fun. I guess it feels better knowing that most of them got theirs.

A no holds barred account of moral and financial bankruptcy of the senior managements of major telecom companies...Malik weaves an entertaining account of the systematic deceit of the public by the barons of the new telecom and power of hype to which many of us succumbed. A must read for all those who lost in the stock market hype to be kept from being taken for a very expensive ride again.....

If you've even glanced at your retirement account balance or brokerage statement in the past few years, you no doubt have felt the effects of the broadband bubble. Less publicized than the tech wreck of 2000, the broadband meltdown was every bit as costly. Journalist Om Malik gathers the varied tales of telecom shenanigans anddf then adds up the stock sales so you can see just how much the broadbandits took. Malik's engaging and vitriolic writing style is fun to read, and he makes the intriguing assertion that the telecoms outdid the dot-coms in terms of sheer greed and gall. We suggest this book to any investor who hopes not to get burned, and to any executive responsible for safeguarding shareholder value.