Mark,
<< please explain how L3 will produce $600-700 million of telecom REVENUES, much less earnings, in 1998, 1999, 2000, 2001... (and without stock dilution). >>
OK, the article I've copied in below the dotted line was posted by yourself on the QWST thread on March 10. It's the same model LVLT will probably follow, don't you think?
BTW, QWST stock closed today at 40 1/16, or 9.8% higher than when the deal with LCI was announced just over two weeks ago. WCOM is trading at about 19% higher than when they announced their bid for MCI.
Theirs deal with LCI and MCI are accretive to earnings (ie, not dilutive to stock) because LCI and MCI have far lower PE, Price/Book, and Price/Sales ratios than their acquirers.
Your question should be "can LVLT build or buy a network while keeping their market cap at a super high valuation". Of course they can (now I didn't say it would be easy). WCOM and QWST did it and LVLT is doing it. Don't act as if the stock has tanked when it's been consolidating very nicely in the upper 60s. Why shouldn't history repeat itself for a third time? Just because?
Phil
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Qwest Communications International Inc., a start-up telecommunications carrier, agreed to acquire larger rival LCI International Inc. for $4.43 billion in stock, creating the nation's fourth-largest long-distance company.
The pact comes at a critical juncture for both companies, which are small players in the rapidly consolidating phone industry. Denver-based Qwest is building an expensive fiber-optic network that it is eager to fill with long-distance telecommunications traffic;
LCI, based in McLean, Va., lacks international and local facilities, and needed to combine or face the threat of being steamrolled by larger carriers such as MCI-WorldCom, analysts said.
The leaders of both companies heralded the deal as a "hand-in-glove" combination that gives Qwest access to LCI's base of residential and small-business customers, and its sophisticated software and consumer billing systems. LCI has been a trailblazer in consumer marketing, too, introducing flat-rate pricing and billing in single-second
increments as opposed to in full minutes. |
