Broadband Wireless Access [WCII, NXLK, WCOM, satellite..] Message Board

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

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To: MangoBoy who wrote (1010)	1/10/2000 9:08:00 AM
From: SteveG	Read Replies (1) of 1860

back in state but at grubfest. will try to catch up later in the week. in the meantime, this from Paine Webber's Hodulik on NXLK/CNCX. interesting is that tgnt is a major CNCX customer. John Hodulik Soo Kim <<NXLK_CNCX.doc>> NEXTLINK to Purchase Concentric for $2.9Billion January 10, 2000 KEY POINTS * NEXTLINK (NXLK) announced definitive plans to purchase Concentric Networks (CNCX) for roughly $2.9 billion, pending shareholder approval. * The all-stock transaction equates to $45 per Concentric share (at current prices) a 50% premium to CNCX's current price of $30. Based on our estimates and including the debt, the deal took place at roughly 11x 2000 revenues versus the current 6.5x trading level of CNCX. * We expect this transaction will allow NXLK to quickly ramp up its data strategy to enhance the company's ability to offer voice and data services over the company's national networks. Synergies between the two companies and time to market could justify the premium paid. * This is not a terribly surprising move for NXLK which had stated its desire to develop these capabilities while it bulked up its internal M&A team. * Rationale for the deal is similar to last week's purchase of Splitrock by McLeodUSA where a large voice-based CLEC purchased a data services carrier to complete its product portfolio. Teligent remains one of the few remaining Tier I CLECs working to establish its own data capabilities. * We maintain a Buy rating on NXLK shares (price target under review) and a Neutral on CNCX with a 12-month price target of $34 per share based on our DCF analysis. * The company will hold a conference call at 9:00 AM, EST at which time we will have further details. * Risk: Risks include technological change, potentially adverse regulatory rulings, mounting losses, continued reliance on the capital markets, high degree of operating and financial leverage and increasing competition from larger, better established carriers.

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