EarthLink Network ELNK Wraps Your Fish Message Board

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Technology Stocks : EarthLink Network ELNK Wraps Your Fish

ELNK 5.630

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Mar 8 4:00 PM EST

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To: Dr. J who wrote (67)	5/12/1997 2:22:00 PM
From: Q.	of 220

Dr. J, Mindspring (MSPG) is ELNK's peer. It is an ISP that leases access from PsiNet (whereas ELNK leases from UUNet) and serves mainly individual customers at a $20/mo service charge, just as ELNK does. They are similar in both size and business. Of the two, MSPG appears to be a more attractive investment based on PSR, book value, operating margin, and capitalization structure. PSR: While ELNK is trading at 2.4 X revenues, MSPG can be had for only 1.9 X revenues (the above are based on enterprise value divided by 4 X last quarters revenues). Book value: ELNK will soon have a negative book value, whereas MSPG has considerably more shareholders equity. Operating margin: ELNK has a negative operating margin of (51%) in its latest quarter, vs (28%) for MSPG. This is before the debt servicing costs. Capitalization structure: ELNK has $7.2 M of long-term debt to service, whereas MSPG has none. My interest in comparing ELNK to BBN is due to the recent purchase of BBN by GTE, which sets a sort of value on companies in the sector, if you can figure out what distinguishes the business models of the various players -- which is the reason for the question I posed to Garry.

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