NEXTLINK Communications, Inc. Message Board

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Technology Stocks : NEXTLINK Communications, Inc.

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To: Steve Warkentin who wrote (197)	8/3/1999 9:49:00 PM
From: AurumRabosa	of 265

Yes I read that very carefully word-smithed press release and it was the tip off. They don't say anything about a profit but if you read their quarterly you'll see their net loss for the quarter was $139.8 million. biz.yahoo.com P/S=($8862,440,898 shares)/(($60,657,0001.2^4)=43.7 I used their average weighted shares outstanding but I saw in a filing somewhere that it's more like 65 million shares but I can't find the exact reference so I'll use the lower number. And I generously compounded their earnings. Turn this equation around and ask what earnings growth rate would be required to produce a rational price to sales ratio? Since this is a Telecosmic mania stock let's say for the sake of argument that a reasonable P/S ratio is 10. Then earnings have to compound at 73.5% every quarter for how many years to pay off all that debt? Isn't Craig McCaw one of the kings of junk bonds? Look at their interest expense of $60.1 million that they pay each quarter on their tons of debt and also $17.1 million each quarter in dividends to preferred shareholders. Read their SEC filings regarding all the junk bonds: sec.gov. The 30-year Treasury bond can easily hit 6.5% in the next few months which will drive yields on new issue junk bonds up and the face value of existing junk bonds down. The default rate on junk bonds has ballooned from 1.67% just 2 years ago to 4.55% which will also make junk bond borrowing more and more expensive. How much cash does NXLK have? $1.84 billion. At their burn rate of $139.8 million per quarter how long will it last before they have go back to the hog trough again? Not long enough. biz.yahoo.com Sorry for raining on your parade but if I owned this stock I'd be buying some protective puts real quick.

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