After Cora and I researched this sector, we wondered if the telecommunications industry was a sitting duck or a duck sitting on a golden egg. Since we don't have a direct line to the future, we thought we'd pass on our discoveries and let you make your own decision.

Throughout this series we've learned each sector has its own form of equipment, methods of distribution (which relies on transportation or transmission), and service areas. The breakdown for telecommunications is no different:

1. Equipment: This includes any device used to communicate with another person. It encompasses televisions, telephones, desktop and hand-held computers, radios, walkie-talkies, and anything else which uses?
   
   
2. Transmission methods: This includes equipment developed for wireless, satellite, and microwave transmissions. It also incorporates cables and wires necessary for you to operate your cable equipment and your phone services, plus switching and processing equipment. This category also includes the science of transforming light and sound waves into various mediums so we can see and hear information.
   
   
3. Services: Say hello to long-distance and telecom carriers, cable companies, Internet and other online service providers, and other companies who keep you hooked to the rest of the world. These providers are the link, or brokers, between you and delivery of your news and entertainment.

This breakdown helps with portfolio diversification and simplifies our choices for research. Once we defined the categories within this sector, we looked at market indicators for telecommunications. We found this sector experiencing rough waters in growth, gross sales, and manufacturing; but, the upside is this quarter's figures in sales, general, and administrative costs are lower. Plus, inventory seems to be moving faster than last quarter.

Of course, we could spend all day looking for silver linings. Cora expresses complete boredom with that game. Instead, she wanted to know what possibilities might be lurking in this field. What inventions, boundaries, and frontiers can we find in telecommunications?

We already know we can take and send pictures of Little Richard with cellular phones. We can purchase software to convert computers into "talking" machines for the blind. We can even turn off traditional radio stations and experience satellite transmissions - straight from the horse's mouth, so to speak. All these new tools and ideas are hot, very appropriate for a fast-moving society, and just plain cool to have around. More than one company is available for investments in this area.

What about transmission of information? This is a great area to study with your kids, because the tools we use to communicate need to fit current technology. Of course, it always helps to understand how our eyes and ears work. When we looked for technology in this sector, we noticed increased demand for working skill and software in areas like color-blindness and deafness.

When you go on an Internet or library search for transmission of light and sound waves, don't let the word "physics" scare you. It's not that difficult to understand the concepts, and we don't need to understand the math language for investment purposes. One great site for adults and older children is The Physics Classroom. This site is geared for high school students, so please don't expect your pre-teen to grasp every concept contained within this site. Alternatively, don't underestimate what your children already understand. They may explain a few things to you.

Electromagnetic waves are physical, temperamental, and somewhat logical. They react to barriers just like humans - they change direction to keep moving. Every time sound moves from one medium to another, the waves change. Certain mediums for transmission are more conducive than others, and each tool used for transmission of these waves is an area to investigate.

Basic knowledge opens doors for more discussion. For instance: why haven't we placed all telephone lines underground? Is this effort based on finances or technology? If we could afford to do this, which company would win the bid? Or, would the work be left to each individual state?

Is it possible to transmit sound through non-traditional mediums? Are we capable of hearing these sounds or will it just drive the dog nuts? What about materials used for transmission equipment development? Are they renewable or nonrenewable materials? How about radios, televisions, and other communication devices? Can we use the old pieces to rebuild new equipment? Are these businesses viable investments?

In our search to answer these questions, we uncovered a New England company with a patent on electronic paper. This computerized paper is pliable, so it bends just like a newspaper or book. This new paper doesn't produce backlighting that bothers so many of us when we use our computers. This company isn't available for investment yet, and the timeframe predicted to mass-produce this new form of communication is within five years. This discovery led us to the realization our world may soon change in respect to traditional print newspapers, books, and business paper.

This invention - among others stewing in laboratories around the world - will create new categories for telecommunications and will inevitably alter many traditional industries. As we uncovered new telecommunication investment opportunities, we realized it might pay to keep our eyes and ears open.

Until Next Week,
Linda Goin