I think WMB is a survivor. They have plenty of hard assets and a log of cash flow. It may hurt them, but they will be able to pay off their WCG obligations if WCG is unable to make the payments. I live in Tulsa where WMB is located. I have not been talking to WMB people lately, but I have never heard anything to make me think they were crooked. I have no knowledge of their energy trading business, but I would guess that it is reasonably under control. They were careful to stay in businesses that they understood.
The big question in my mind is will WCG make it? They had a good business plan initially. They have wonderful customers, SBC, Verizon, NBC, CBS, Fox, ESPN, etc. who have deep pockets and may help them out. SBC owns a lot of WCG stock. Their problem is that the price of broadband has dropped 80% in the last year. They get a premium price, but how much premium can they continue to demand when there are bankrupt telecoms practically giving away broadband?
If the price does not deteriorate too much I think they will make it. I bought some in the last couple of days at an average price of $.72, so I am up a nickle so far, but I am nervous that their lenders will lean on them too hard because of the telecom BK's that have already gone down and the one's that are likely to happen soon.
So, it is my judgement that WMB may take another hit, but they won't go to zero. WCG is iffy.
Time for the opening ceremonies.
Best to all,
JRH |
