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Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..]
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To: SteveG who wrote (568)8/11/1999 11:05:00 AM
From: SteveG  Read Replies (1) of 1860
 
CSFB - WCII:Reports Healthy 2Q Results
CREDIT SUISSE FIRST BOSTON CORPORATION

Equity Research Americas
U.S./Telecommunications Services/CLECs

John D. Doughty

BUY
LARGE CAP
WinStar Communications (WCII)

WinStar Reports Healthy 2Q Results.

Summary

WCII's healthy 2Q results provide further evidence of
management's ability to execute. The company is making solid
progress in its market expansion and marketing of multiple
services and on-net lines. Point-to-multipoint services are
on schedule to be rolled out in the fourth quarter.

WCII reported core revenue of $76.8 million, slightly below
our estimate of $77.9 million. Gross margin was 24%, right
in line with our estimate. EBITDA loss was $83 million
versus our estimate of a loss of $86.6 million, reflecting
lower SG&A expense than forecast.

The company continues to take advantage of the burgeoning
Internet/data market, generating run rate revenues of $135 million.

As reported earlier, WCII installed 69,000 access lines
(versus our estimate of 68,000) of which 48% were on-net. At
the end of the period, 27% of WinStar's access lines were
completely on-net. In addition, the take rate on multiple
services increased to 62% from 60% in the prior quarter and
from 46% in the same period last year.

We decreased our 1999YE loss per share estimate to $12.66
from $12.76 to reflect less interest expense than estimated
partially as a result of the debt to equity conversion in June.
We continue to view WCII as a core holding in the CLEC
group and reiterate our Buy rating.

Price Target Mkt.Value 52-Week
8/10/991 (12mo.) Div. Yield (MM) Price Range
46.00 $70 None $3,206.2 $10-64
Annual Prev. Abs. Rel. EV/ EBITDA/
EPS EPS P/E P/E EBITDA Share
12/00E (11.26) NA NA (3.11)
12/99E (12.66) (12.76) NA NA (6.00)
12/98A (11.94) NA NA (5.12)
March June Sept. Dec. FY End
Dec. 31
1999E (3.72)A (3.53)A (3.24) (2.25)
1998A (2.54) (2.77) (2.83) (3.80)

ROIC (3/99) (20.0%)
Total Debt (3/99) $1.5 Bil
Book Value/Share (3/99) NM
WACC (3/99) 12.3%
Debt/Total Capital (3/99) 100%
Common Shares3 69.7mil.
EP Trend2
Est. 5-Yr EPS Growth NM
Est. 5-Yr. Div. Growth NM

1On 8/10/99 DJIA closed at 10655.15 and S&P 500 at 1281.43.
2Economic profit trend.
3Shares outstanding reflect fully diluted shares.

WinStar is a competitive local exchange provider using 38 GHz
technology to build out local telecom networks in major
markets throughout the country.
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