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Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..]

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To: SteveG who wrote (755)	10/6/1999 1:30:00 AM
From: SteveG	Read Replies (1) of 1860

WCII: DEAL WITH MFN SECURES INTRACITY FIBER CAPACITY NATIONWIDE--STRONG BUY Deutsche Banc Alex. Brown - US Equities Bo Fifer,Jeffrey L. Hines October 05, 1999 --------------------------------------------------------------------------- ---- WINSTAR COMMUNICATIONS INC. [WCII] "STRONG BUY" Deal With MFN Secures INTRAcity Fiber Capacity Nationwide --------------------------------------------------------------------------- ---- Date: 10/04/1999 EPS 1998A 1999E 2000E Price: 40.19 1Q (2.51) (3.72) (3.51) 52-Wk Range: 64 - 10 2Q (2.77) (3.53)A (3.38) Ann Dividend: 0.0 3Q (2.83) (3.62) (3.20) Ann Div Yld: 0.00% 4Q (3.80) (3.44) (3.01) Mkt Cap (mm): 3,308 FY(Dec.) (11.89) (14.31) (13.11) 3-Yr Growth: FY P/EPS NM NM NM CY EPS (11.89) (14.31) (13.11) Est. Changed No CY P/EPS NM NM NM --------------------------------------------------------------------------- ---- Industry: COMMUNICATIONS Shares Outstanding(Mil.): 82.3 Return On Equity (1998) : 0.0% --------------------------------------------------------------------------- ---- This First Call was priced at the 10/4 close. HIGHLIGHTS: Winstar announced a deal with MFN for INTRAcity fiber in 50 of Winstar's 60 targeted domestic markets. Deal is for multiple strands of dark fiber and is valued at $315M over 20 years. Winstar currently pays about $1.5M/month for intracity capacity, was expected to reach $2.5M/month by end of 2000. Local capacity costs will now be capitalized and captured as depreciation, no longer cost of service impacting EBITDA. Cash payments fixed at $1.3M/month. Deal expected to contribute 500 basis points to gross margin over CY2000, still expect to exit year with margins north of 50 percent. Deal includes 3 European cities and long haul in Germany, plus direct fiber access to larger buildings where appropriate. *We are not changing our model, but we have increased confidence that Winstar can meet/beat expectations. Should be a catalyst for the stock. Reiterate STRONG BUY investment rating on the shares and $68 12-month price target, based on our 10-month DCF.

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