A brief analysis on TSIX:
Analysis: This deal is one of the more talked about IPOs in a long time. Much of the hype or anticipation surrounding this deal stems from the fact that Greg Maffei joined the company. Mr. Maffei was well known around Wall Street as Microsoft's very cautious but incredibly smart CFO. He kept the company's finances in order allowing them to repeatedly beat Wall Street estimates, quarter after quarter, without any financial hiccups. Although the Internet backbone space is beginning to get somewhat crowded there is a tremendous need for bandwidth and private fiber optic networks. Also and most importantly telecommunications and Internet service providers who wish to expand globally are finding it is cheaper and easier to buy network space off of companies such as 360Networks rather than building their own networks. A perfect example of this is PSINet, which instead of building its own network in Canada, decided instead to purchase space from 360Networks. The company's sales growth is tremendous, and more importantly, especially in a turbulent market environment, the company is profitable. Regardless of how this market shakeout ultimately ends, you can expect to see a change in sentiment. While losses may still be acceptable, profits will be much more preferable. The deal's float while large, should easily be sold by the deal's multitude of underwriters, which are led by one of the best in the business, in Goldman Sachs. In terms of valuation, 360 looks relatively cheap when compared to the company's closest competitors KPNQwest and Level 3. These companies trade at an average prices to sales ratio of about 75. Based on this ratio, 360 should trade at about 17.6 billion dollars, or about 70% above the current valuation, should the deal price at the high end of the range.
Overall expect a solid premium for our Pick of the Week, 360Networks.
A Solid rating shows that IPOIsland.com believes that the specific deal will receieve an initial first day premium of
between 25 and 50%.
Found at:
ipoisland.com
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