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Technology Stocks : George Gilder - Forbes ASAP
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To: Bernard Levy who wrote (5481)2/17/2001 11:55:52 PM
From: akmike  Read Replies (1) of 5853
 
We seem to agree on who the worst positioned are, since you named the "flag carriers". I would place GX and LVLT ahead of the "copper reliant Baby Bells" (esp. Gx with their sub-sea assets) because, in spite of their financial strength the RBOCs are in the position of having to invest in assets that obsolete a great amount of their existing assets. They don't have a culture of moving quickly and IMO when they delay to squeeze more residual out of the legacy assets they are vulnerable to being overtaken. GX will be discretionary cash flow positive in 15 months if they remain on plan. (Their short corporate history is to exceed plan) If they do this, they will be more than competitive with the RBOCs on cost of capital. (and getting a much higher rate of return on investment) When GX has the build out of their system complete, and are throwing off positive cash in great amounts, they will be able to raise new equity at a very low cost of capital and be able to pick up the "pennies on the dollar" assets to enhance their growth.
I guess that I also agree with your premise about the importance of cash flow and the resulting balance sheet considerations. Given the choice though, the best investments will be the ones with the least legacy drag on the capital structure and the most global footprint in fiber assets.
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