Xcelera.com Dn -2:Freres Analyst Gives Stk $7 Value >XLA
7/13/0 12:45 (New York)
By Kaja Whitehouse
NEW YORK (Dow Jones)--A scathing research report by Lazard PLC that
seriously
questioned the value of Xcelera.com Inc. (XLA) pushed down shares of the
Internet holding company 16.4% Thursday.
"Sell the stock," was the message from Lazard analyst Luke E. Fichthorn,
who
issued the note.
Fichthorn started coverage of the stock with an underperform rating and
suggested its value was just $7 a share, way below the stock's Wednesday
closing price of 28 1/8. The price estimate was based on an analysis of
Xcelera's portfolio holdings, valuing its main holding in Mirror Image
Internet
Inc. at $5 a share, and the remainder of the holdings at a mere $2 a share.
The company disputed the report.
"Xcelera strongly disagrees with the conclusions drawn in today's Lazard
report. It was made on faulty assumptions and a misconstrued valuation
model,"
said Paul Caminiti, an Xcelera spokesman.
Fichthorn's report went on the address the prospects for Mirror Image.
"We are concerned that refresh rates on the cache for ISPs will make the
Mirror Image product uneconomic from a bandwidth perspective," said
Fichthorn.
Xcelera says it will spend $50 million on Mirror Image for fiscal year
2000,
but only expects the information services concern to bring in revenue of $10
million for the same period, he said.
The analyst said he was concerned about the company's ability to "mirror a
Web site with tiered-server architecture on a single serve," and found it
"difficult" for Mirror to store all its business operations on only two
terabytes.
Contributing to the inflated value of the Cayman Islands company's stock
has
been "sensationalist press coverage," said Fichthorn. He noted a stock surge
of
50% once after George Gilder of Gilder Technology Report wrote a bullish
article on Xcelera.
The company's AMEX-listed shares recently were down 4 5/8 to 23 1/2 on
volume
of 1.8 million, compared with average daily volume of 1.3 million.
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