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Technology Stocks : Global Crossing - GX (formerly GBLX)
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To: cardcounter who wrote ()2/19/2000 9:06:00 AM
From: Daskin  Read Replies (1) of 15615
 
From Morningstar: Global Crossing Is Expensive, but Deservedly So
by Michael Hodel | 04:03 PM | 02-18-00 (Updated 04:23 PM | 02-18-00)

While Global Crossing GBLX stock is expensive and risky, it could nonetheless make a good investment.

The most important news from the telecom carrier's fourth-quarter earnings release Friday was that it's getting solid performance from the operating units that will drive future growth. GlobalCenter, the company's Web-hosting and Internet services business, doubled its customer rolls and almost tripled its revenues. Wholesale bandwidth sales and data transport revenue also registered strong gains.

In the quarter, Global Crossing grew revenues more than 400% from the year-earlier period, but most of the rise resulted from acquisitions--internal growth was just 5%.

But revenue comparisons between the last two years are difficult, because a 1999 change in accounting rules forced companies to recognize revenue over the life of a contract rather than when cash is received. While this rule change has no effect on cash flows, it means that revenue comparisons between last year and this year are unduly harsh. Adding back revenue that would have been included under the old accounting rules yields an internal growth rate of about 10%.

With a spinoff of GlobalCenter in the works and a potential spinoff of the Asia Global Crossing joint venture being discussed, the coming year will be an eventful one for Global Crossing. Although the stock isn't yet cheap by any means, today's 13% selloff makes it worth a second look.

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