Dear Al:
Why do these junk bonds scare you? That is not inconsistent with how NXTL's been capitalizing themselves for some time now. I believe under this financing they are rolling over higher coupons and actually improving cash flow by deferring cash payouts and in some cases reserving the option to refund in kind. What is the concern. On top of that they waited for the bond market to get pretty close to what may be a top. They would only borrow if they thought they were going to need it to expand revenues at the cheapest cost of capital.
Does this look like their expecting growth:
LHS Group shares gain on Nextel pact
ATLANTA, Feb 6 (Reuters) - Shares of LHS Group Inc soared on Monday after the company said Nextel Communications Inc (NXTL - news) signed a
master agreement to buy multiple LHS business support and control system software software product licenses.
The company is also scheduled to report fourth quarter earnings after the market close on Monday, and both an LHS Group spokesman and an analyst said that
could be contributing to the stock's rise.
Wall Street expects LHS Group to earn $0.14 per share, according to a First Call consensus survey of analysts. The stock gained 8-7/8 to 81-7/8 ahead of the
release.
The stock started climbing in Germany, where it also trades, and the strength continued when the U.S. stock market opened on Monday, analysts said.
''The stock was very strong in the German market earlier today,'' said Susan Passoni, an analyst at Cowen & Co. ''In terms of specific catalysts, the earnings
are coming out this afternoon and the company announced the Nextel contract, which will support international affiliates.''
A company spokesman, when asked about the stock price rise, said: ''It's probably a combination of factors.''
Under the agreement with Nextel, the company said initial installations would support Nextel's international affiliates in Brazil, Mexico, Argentina, and the
Philippines.
One analyst said the contract was a competitive win for the company, which provides client server modular billing and customer care software products.
''Because business support and contrl system software supports multiple telecommunications standards, it is the ideal solution to support our iDEN (integrated
digital enhanced network) offering,'' said Mike Ozburn, Nextel's vice president and chief information officer.
In addition to billing services, LHS' system will be used to capture customer data and activate phones as well as for discounts and promotions, call rating, fleet
management and bill processing among other services, the company said.
John |
