Who do you think to be the better investment at this stage CHTR or HSAC? Doesn't CHTR at 26 seem like the runner? I'm just starting to look into these companys based on this rec from the Internet Stock Report
HSAC: The Wired Wired World
It looks like it is finally happening. Paul Allen's so-called "wired
world" will be real.
Yesterday, Paul Allen's cable company, Charter Communications (CHTR),
announced that it will make St. Louis the testing ground for his vision.
This was done by swapping cable systems in Texas, as well as five other
states, for the AT&T Broadband and Internet services located in St.
Louis (and three other states).
Consumers will have a wide array of virtual services, such as high-speed
Net access, phone services, interactive video -- all driven through
cable wires. To carry out the vision, Allen has been on a spending
spree, purchasing interests in a myriad of companies.
One of these companies is High Speed Access (HSAC). Simply put, the
company allows for super-fast Net access over cable lines. For example,
instead of plodding along at 56K, you can instead surf the Web at speeds
100 times, thus allowing for multimedia, video and so on.
How does High Speed Access make money? The company gets exclusive
arrangements with cable operators and revenues are divided. The service
fee per cable modem is about $40 per month for the consumer (there is
also a monthly rental fee for the cable modem of $9.95).
However, the company's stock has been in the doldrums, with it selling
for $23 yesterday. The range this year has been $15 to $49-3/16. The
company went public on June 4 at $13 per share.
On its face, the company looks quite small, with revenues of about $1
million for the third quarter. Although, this was an increase from
$101,000 in the same period last year. Of course, the company is losing
money: $14.3 million in the latest quarter, compared to $11.1 million in
the same period last year.
But the company's value is really about its tremendous potential. The
company has been laying the groundwork to build a substantial customer
base. By aligning with cable partners, the HSAC service can be deployed
to 1.5 million subscribers in 26 states. This was a 76 percent increase
over the prior quarter.
There is tremendous competition. But HSAC has positioned itself in
markets where it is not as intense. That is, HSAC focuses on the
"exurban" markets, which have cable systems with fewer than 100,000
homes. In all, this represents about 48 million homes. What's more,
small markets usually are more amenable to oustourcing solutions.
HSAC also has other major backers besides Paul Allen. Microsoft. (MSFT)
, Cisco (CSCO) and Com21 (CMTO) are investors.
With Charter's announcement yesterday, there should be lots of news
about HSAC and how it will participate in the wired world. In other
words, HSAC could be poised for upside. |
