Jason, just in case you really don't know, here how WInStar's
revenue is projected to grow (Vogel's numbers, in millions):
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Telecom 38 227 691 1184 1738 2340 3004 3729 4518 5393
New Med 41 56 60 65 70 75 82 88 95 103
Total 79 283 751 1248 1808 2415 3086 3817 4613 5496
Now, since you think $100M is a reasonable number for the value of
New Media, what value would give the Telecom business. I'll add the
numbers up for you; over the next ten years, WinStar is projected to
generate $30.0 billion in revenues. New Media is projected to
generate only 0.8 billion of this, the telecom business the other
$29.2 billion. So new media is responsible for only 2.7% of
revenues. I'll let you figure out the growth rates, but I'll give
you a hint; telecom will blow away new media. Also look at
margins; in ten years WinStar will have approx 70% of their
buildings on-net, meaning they will be earning margins of approx
65%. Or probably triple the New Media division.
So, in New Media, we have a division generating only about 2% of the
revenue, growing much slower, and earning much lower margins. By
your admission, if this division is fairly priced at $100 million,
you tell us the value of the rest. I'll give you a hint, I'd start
somewhere around $5.0 billion, or in the neighborhood of $150 per
share. |
