Actually it was the debt comparison that sparked the dsln run.
Much smaller company, and all, but you can't fight the facts of Covad's debt load.
DSL.net Up Again After Kaufman Buy
Initiation Thurs
Updated: Friday, February 2, 2001 01:12 PM ET
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As of Sept. 30, 2000, the company had about $15 million in debt and $109
million of cash and cash equivalents, according to CIBC World Markets analyst
Joe Altobello.
This compares to Covad's $1.3 to $1.4 billion in debt and $900 million of cash
and equivalents, and Rhythms NetConnections Inc.'s (RTHM, news, msgs)
$825 million in debt, $490 in preferred stock, and $670 million in cash and
equivalents as of that date.
The company, DSL.net, is funded through the
fourth quarter of 2001, estimated Altobello.
On Thursday, regional Bell SBC
Communications Inc. (SBC, news, msgs)
announced it was raising the price of DSL
service by $10 a month - a sign that the DSL
prices may be stabilizing.
This is good news for DSL providers' bottom
line, said Kaufman Brothers' Grover.
"As the competition dies, the weak gets
weeded out and the capital markets shut
down, so these businesses need to raise
prices to get a more reasonable return on their capital," said Grover.
The sector shakeout may also be boosting DSL.net's attraction as a potential
acquisition target, according to CIBC's Altobello.
"They have customers and they're in some rather smaller markets where
there's not a lot of competition, so someone looking to tap into this market
might find this a good prospect," he noted.
DSL.net mainly operates in smaller cities, such as Albany, N.Y., Syracuse,
N.Y, and Birmingham, Ala., while competitors Covad and NorthPoint target big
cities such as New York and Los Angeles.
This gives DSL.net more potential for expansion because it has less
competition, Grover said. |
