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Technology Stocks : Able Telecom (ABTE)
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To: Sir Auric Goldfinger who wrote (657)4/8/1999 5:05:00 PM
From: david james  Read Replies (1) of 700
 
By the way, there were strings attached to the deal. MCI Worldcom wanted whoever bought MFS to guarantee that they would complete $350 to $500 mill in MCI-Worldcom construction projects at 15% margins. In this business, those are relatively low margins - although guaranteed profits aren't all that bad.

Furthermore, although Able is having no trouble getting bonding on their new projects, there was some question about whether the New Jersey consortium deal and the previous Colorado deal would be bonded at current levels of the contract. It now looks like they have reworked the Colorado contract and now have bonding.

I think both of these factors played a role in selling MFS. I don't expect great profits on the New Jersey deal. And it appears this is why the auditors (the fraudulent Arthur Andersen) allowed Able to add $40 mill to their goodwill.

DJ
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