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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR)
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To: russwinter who wrote (407)11/25/2002 11:17:57 PM
From: pcstel   of 3386
 
lose money initially to create a valuable asset in the end) so I process things a little differently. I call it the race to the finish line model: first goal is cash flow breakeven, second goal is generate substantial free cash flow.

So let's put this in perspective. If you were renting apartments for let's say $990 per month. And a prospective renter wanted you to provide $18,000 dollars in new furniture (were not talking TI's here) which would be his to keep when he decided to move to a new apartment. Would you do it? Now, to make it sound even more ludicrous. He's only going to rent on a month by month basis, no contract! And if you think that is bad, you have to go borrow the $18,000 at a cost of capital of 14%. Let's say you had 1,000 apartments like this, and offered the same deal to everyone who rented from you. How many banks would fund this business?

PCSTEL
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