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Technology Stocks : Midcom (MCCI)
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To: RichN who wrote (6)11/7/1997 9:41:00 PM
From: Jatin Kadakia   of 25
 
Chapter 11 is not always a bad thing. It is means for a company to sort out its problems without being nagged by creditors daily and distracted from normal business operations. I have seen many companies emerge from bankrupcy protection and fair well. Yes it is bad news and investor should understand the risk/reward. It is when chapter 7 is filed then shareholders are last to get anything out of liquidation. Don't take me wrong. It indeed is bad proposition and many companies would take their business elsewhere. It is a real challenge for the management to convince them to stick around. Although MCCI has a lot of debt, it still has a good number of accounts that any large carrier would like to get their hands on if the price is right. It takes a lot of investment to line up a business account (advertising, marketing etc.) Do not forget, the management is willing to consider merger/partnerships.

MCCI was a nicely growing business but they tried to mimic WorldCom strategy and failed badly. I blame original management for previous troubles which never got resolved by new management. They also failed badly in controlling expenditure.

If it gets down to 1/2 - 5/8 range I will probably pick up some shares as pure gamble. Large customer base is worth a lot right now. If they fail to partner soon, they will be slowly starting to take their business elsewhere. Also remember that MCCI has small networks in place which also are worth something.

Regards,

JK
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