The story of the 'pickee' and the 'picker'!
MCI in talks with WCOM>E// GTE+BT Combo may end up owning MCI
and don't forget AT&T.
Sal,
Like you said I have no idea what the hell is going on, all I know is the stock is back in the trading range again 40-46 area.The only time it moved above 50 is when the Street thought GTE was ripe for the picking and instead the 'pickee' became the 'picker',sort of and we are back to square one with in terms of the stock price.
I strongly believe that the only thing that could boost the price of GTE is a surprise bid from AT&T, it may still go up, but we may have to wait around for a long time as usual.
I did a little back of the napkin analysis, and found out if GTE buys
MCI the following could happen:
Total Rev (GTE+MCI) =approx. 40-42 billion dollars
Total profitablity (GTE approx 14%,MCI approx.7.5%) so let's take the average and say 10-11% for the joint company)
Total profit margin for the combo will be approx=$4.62 billion/yr
Total LT debt =approx 54 billion
(mind you this doesn't include mci's LT debt)
So it will take GTE 11 to 12 years to pay off the debt assuming they
deploy all the profit to paying off the debt.So much for dividend, and
investments etc etc.You add MCI's LT debt to the 54 billion, hell,who knows? I know I am wrong, but hey,it could happen.
biz.yahoo.com |
