General Thoughts on LWIN: Anyone besides Jon and Maurice still here?
Here are my thoughts:
Assumption #1 - LWIN needs around 2,000,000 subs to get to cash flow break even, including debt at the old terms and conditions.
Assumption #2 - LWIN will add gross subs to the tune of 350,000 in the current quarter. (for the record, gross adds for the last 4 Q's are 258K-Q2-02, 391K Q1-02, 473K-Q4-01, 301K-Q3-01)
Wild Card #1 - Churn. How much will churn affect the net adds? I'm expecting churn of 2%/month, or 6 % for the quarter, decreasing our total subs by 87,000, leaving a total subscriber base as of September 31st of 1,713,000.
(note, if churn is 3% - 4% , we end with 1,670,000 - 1,626,000)
Assumption #4 - LWIN will have success with negotiating a lower payoff for MCG. I believe they will do this by buying the unauthorized 20,000,000 share stock certificate back for $5,000,000 to $10,000,000. (Why would MCG not settle for this, when the current paper can not be traded, but shows a market value of less than $2,500,000?)
Assumption #4 - LWIN will succesfully renegotiate more favorable terms for their debt, most likely before the end of November. I assume this because I can not see any of the creditors (Ericcson, Nortel, Qcom, or the US Gov't) forcing a liquidation that will yeild them pennies on the dollar while being shown a plan that shows they can receive 100% of their notes if they simply allow more time. I think this will happen by the end of November because they hired USB Warburg at the end of August, and should not take more than 60 - 90 days to accomplish a financial restructure so long as the company shows a reasonable path to recovery.
By the end of Q1 2003, LWIN will be cash flow positive, and the stock will have rebounded back to the $6 - $10 trading range, and by January 14th, 2005 (with 2,600,000 subs) it will trade at $40, with 2005 estimate near $1/share.
And all this from, what, .13 cents per share today!
There has been enormous selling pressure on LWIN during the past few months, primarily due to institutions that have to sell when the stock breaks certain levels, and recently due to the delisting announcement. This selling has been so large, it was able to mask a massive short covering (over half the shorts got out by mid September, and probably much more by now.) Once the forced sellers are gone, who else would bother selling at these prices?
Here's hoping!
Good luck to al |
