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Technology Stocks : Excel Communications
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To: Carlson who wrote (2348)12/10/1997 12:22:00 AM
From: Rob S.  Read Replies (2) of 2806
 
Here's a statement from the pres release:

John J. McLaine, President and Chief Operating Officer commented, ''Over the past several months, our customer base has continued to grow at a rate faster than anticipated by most analysts. We changed our accounting policy in the first quarter of 1997 to fully expense customer acquisition costs in the period incurred, which results in higher marketing service expenses during a period of strong customer growth. The Company also has underway a marketing promotion which will cause acquisition costs per customer to increase by approximately 10% during the fourth quarter.''

I am surprised at the extent of the lower earnings. I thought ECI would take a hit due to the higher acquisition costs but not this much. However, this increased expense is amplified by the higher growth rate in new customers and IRs. That effect will deminish over the next few months.

I have to admit that Excel may drop a bit further before it settles. My expectation for a move up is pushed back by another 2-3 months. It will be interesting to see how the plans to open up the commerical market to IRs pans out - that could spur Excel much higher later in '98 but will likely take a few months to build momentum.
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