September 20, 2000
Dow Jones Newswires
Winstar CEO Not Aware Of Any Reason For Stock Drop
Dow Jones Newswires
By Janet Whitman
Of DOW JONES NEWSWIRES
NEW YORK -- Winstar Communications Inc. (WCII) Chairman and Chief Executive William Rouhana said Wednesday he is not aware of any reason for the drop in the company's stock other than the broad selloff among upstart telecom companies.
Winstar shares slid to a 52-week low of $15.38 early Wednesday. The stock recouped some of its losses by midday, trading at $16.75, down 13.8%, or $2.68, on volume of 5.6 million shares, compared with average daily volume of 1.5 million.
"I can't think of any reason why this is happening," Rouhana told Dow Jones Newswires in an interview. "Clearly we're being affected by other people's failure to perform and their failure to implement their business plans, not by our own actions."
Shares of upstart telecom companies have come under increased pressure this week following a warning Monday by ICG Communications (ICGX) that it will fall far short of its revenue and earnings expectations for 2000 and 2001 and that it has revised its business plan because of funding concerns. ICG also warned of "serious customer issues."
That news sparked concern among investors about future funding and operations at other competitive local exchange carriers, or CLECs.
CEO Rouhana said, however, that Winstar is not experiencing similar woes.
"Because we own the network, we are able to control the quality," he said. "We have no performance-related issues concerning the network.
"Fundamentally, we're operating very well," he said, adding that Winstar is "absolutely on track" to meet Wall Street's expectations for the coming quarter and the year.
A FirstCall/Thomson Financial survey of 12 analysts pegs the New York company's results at a loss of $2.55 a share for the third quarter and a loss of $10.04 a share for the year.
"We've been executing on our plan for the last several quarters and we've actually been beating expectations," said Rouhana. "We don't expect any change."
He added that Winstar is fully funded into the end of 2001.
"We refinanced our entire company at the beginning of the year in anticipation of the (unfriendly turn) in the capital markets," he said. "We have $1 billion plus that gets us well into the end of next year."
Of a $2 billion financing package Winstar received from Lucent Technologies Inc. (LU), the company has drawn $390 million, leaving $610 million remaining of the first $1 billion tranche, he said.
Winstar also had more than $400 million in cash, he said.
"We have over $1 billion right now without having to do anything," said Rouhana. "That's why the concerns (about financing) are not right."
Winstar has no plans to return to the capital markets to raise additional funding in the near term, particularly "not with prices at these foolish levels," he said.
Winstar's junk bonds have fallen 3 points over the past three days, reflecting the broader weakness among telecom upstarts, rather than fundamental concerns at Winstar, junk bond traders said. Winstar junk bonds were quoted at bid at 93.5.
-By Janet Whitman; Dow Jones Newswires;
201-938-5248; janet.whitman@dowjones.com |
