forbes.com
Streetwalker
11.12.01
Leaning Tower
American Tower (nyse: AMT - news - people) rents out antenna-use to wireless and broadcast operators on the 14,000 communications towers it has bought since 1995. Stephen Worthington, portfolio manager at Barbary Coast Capital Management, thinks that in its haste to build market share it overpaid for underperforming assets. Result: a huge $3.9 billion debt, twice the company's stock market cap.
Meanwhile, the next-generation wireless technology it's counting on is taking longer than expected to arrive. And the company must shoulder a huge expense of making the 1,900 microwave towers bought from AT&T suitable for PCS (personal communications system) cellular transmission. What's more, two big potential customers, VoiceStream and Cingular, are teaming to provide their own tower networks.
Worthington expects American Tower to run out of cash and financing opportunities, and enter restructuring within a year. The company has lost $270 million in the last 12 months. Shares trade at $15, down two-thirds from the 2001 high. But they have further to go. Cover at $5.
--Christopher Helman |
