Assets versus Earnings:
BT pored over MCI's earnings erosion, forced a 25% reduction in their bid ($40 to $30) thereby knocking MCI's market price down and creating an opening for WCOM's all-stock deal. BT facilitated the sale as surely as if they had brokered it directly. For a few bil, BT toyed with MCI and lost them.
Telecom networks are scarce and hard to replicate. In an accumulation phase which the telecom industry is clearly undergoing, the watch-phrase is "assets at any cost". Those who gnash their teeth over EPS shortfalls I think are missing the big picture.
Schraeder's latest strategy appears to be "assets over earnings", and I applaud this, though with some trepidation. As we know, Bill has a history of lurching from strategy to strategy: into retail, out of retail, into software, out of software, into account accumulation, now into "quality" account retention. For a while, Schraeder even half-played the Wall Street game, making a string of silly earnings projections which have harmed this stock more than just about anything else.
Forget the earnings; he now has the cash to make PSINet into a saleable asset. Not a business mind you, but a saleable asset. Of course, this is where I get the tremors...I mean, we all agree that you are building a saleable asset and not a business oh Great Founder of the first ISP? Could it be that we, the mercenary shareholders who are always a $19.95 trade away fom divesting ourselves of PSIX, have our eye on a different prize? That is, stock appreciation at any cost?
I mean, we'd own Wal-mart tomorrow if we thought we could make a faster buck. For Bill, maybe stock performance is, say, fourth behind running a visible public company, being asked to speak at industry events, and having a big highback leather chair.
Who out there can say with assurance that Bill is fighting for us and not for, well...Bill?
Come on, even Bill doesn't buy the go-it-alone line. They use that to fill out the press releases because it sounds a lot less plaintive than "please buy me", right?
If we get killed in this stock, it will be bitterly unfair. Mind you, I am optimistic. But if it happens, our cause of death will be Founder's Complex. |
