WCOM
From yahoo board:
WCOM go bk? impossible! here's why
with $7-$7.5 billion in free cash flow per year (predicted to increase) and less than $2B/year interest on debt - and considering $1.6B in cash-on-hand, plus available credit lines, plus easy asset sales - bankruptcy is absolutely impossible in the forseeable future - the $1-2B principal coming due in each of the next few years (though none in 2002) is trivial compared to the cash at wcom's disposal
no one is forcing them to spend on capex - they're quoting $4.5B - $5.0B spending on capex because there are no liquidity issues forseen.
if the economy falls off a cliff from here (unlikely), they have the option of diverting most of their capex spending to debt service.
another thing about capex spending - lots if not most of it goes toward setting up NEW CUSTOMERS & new sales to existing customers. if their revenues go down further (i don't think they will), they'll be able to divert more capex, no problem.
additionally, they can sell $1-2B in non-core assets w/o even thinking about it, and more obviously could be sold if necessary.
it's dumb for people on this board to even talk about bankruptcy, & unethical/criminal for the analysts to talk about it.
could wcom go BK years down the road? sure. but there'll be lots of others in front of them, including all the other telecom players (more debt, less earnings), not to mention companies like GE ($450 BILLION in liabilities)
BK does NOT usually come as a surprise either - look at what happened to KM prior to it's bankruptcy - several quarters of heavy losses, massive layoffs, lots of near term debt maturing simultaneously. NONE OF THIS IS OCCURRING WITH WORLDCOM. |
