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Technology Stocks : CellularVision (CVUS): 2-way LMDS wireless cable.
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To: Ken98 who wrote (1522)3/14/1998 8:58:00 AM
From: James Fink  Read Replies (2) of 2063
 
I found this financial tid-bit in the January 1998 CVUS press release announcing JP Morgan's lending of an additional $1 million. It appears to demonstrate that although CVUS has a cash crunch problem and suffers illiquidity, it nevertheless possesses a relatively strong balance sheet and substantial shareholder equity.

"The company's cash position as of the closing of this note is approximately $1 million. CVUS net working capital deficit is approximately $6 million. Property plant and equipment is estimated at $21 million with debt under $9 million. Stockholders' equity is currently estimated to be approximately $12 million."

One must remember that CVUS' balance sheet does NOT include the value of its New York license, because it paid nothing for the license. Assuming the license is worth $7 per pop, this amounts to additional shareholder equity of ($7/pop * 8.6 million pops) = $60.2 million. Add this $60.2 million to the balance sheet equity of $12 million and you get a final shareholders equity of $72.2 million. Book value per share is, therefore, $72 million/16 million shares = 4 1/2, above the current stock price. In addition, many stocks trade at between 1 1/2 and 2 times book value.

If my estimate of the per-pop value is too low, so much the better. If my estimate of the per-pop value is too high . . . I choose not to contemplate that prospect.
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