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Technology Stocks : RCN Corp. (RCNC) - Voice-Video-Internet
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To: SteveG who wrote (421)7/30/1999 8:53:00 AM
From: HVN  Read Replies (1) of 720
 
Yikes! even though they beat the earnings estimates, they don't seem to be doing much on the revenue growth front. On the one hand they cliam to be adding homes like crazy, but on the other hand revenues barely even grew. Either they aren't adding homes rapidly, or they are facing huge pricing pressure - which is unlikely since the incumbant cable companies in the north east area continue to raise their cable rates. So, this leads me to conclude that even though RCN must be adding customers at a rapid rate, and prices are most probably NOT going down, they have a rather high churn rate. THAT is a big concern in an industry which is used to rather low churn rates.

Also, I have observed that in the NYC area, they grew rapidly when they advertised a lot - however, now that they've cut back on their advertising - that could also explain the slowdown. Also, I live in an area where they 'claim' to provide support - yet, to the best of my knowledge my town does not have a single person who can actually get the service. I call them every 2-3 months to see if I can get their service, but cannot. Another thing that worries me is that their 2Q report starts off with fiber laid, homes passed etc. rather than the bottom line. I'm long on these guys.... but at this stage I will add that I am 'concerned' with these issues.

Anyone any thoughts?
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