COMS & the Ghost of USRX w/ other STUFF Message Board

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Technology Stocks : COMS & the Ghost of USRX w/ other STUFF

COMS 0.00400

+185.7%

Dec 5 9:30 AM EST

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To: David Lawrence who wrote (17486)	10/20/1998 1:20:00 PM
From: joe	of 22053

From JJC (today's issue): Junk Market Troubles Hit Home Wall Street hit Main Street with a vengeance last night on the Ascend (ASND:Nasdaq) conference call. It seems that the competitive local exchange carriers needed financing to buy equipment, financing from Ascend. Hmmm. For many as long as I can remember, the junk bond market provided that financing. Now the suppliers have to supply that financing. With that financing comes reserves for potential slow payments, and a whole slew of questions about the real gross margins on that business. The illiquidity of the corporate junk bond market is finally hitting home. I have been waiting for some sign that Wall Street's meltdown had to impact corporate infrastructure spending, but I didn't think I would hear about it during Ascend's call. You could tell it spooked people on the call, but I can't say we should not have seen this coming. These companies have been shut out from the capital markets for the time being but they have to complete their build-outs. The best way to do it is to pit one supplier against another and see who blinks (meaning who ponies up the most financing, or the best terms). From the looks of things, Ascend did the ponying. I suspect that until the junk market comes back, anybody who relies on junk financing to buy capital goods will have to curtail spending or find a supplier willing to provide that financing. All in all, it makes for a new wrinkle in the telco equipment story. How much of it is in the stocks? That's what we will find out this morning, when word gets out that the Ascends of the world are now, reluctantly, in the banking business. EOM

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