Mr. Cogan:
As other long time participants on this thread will attest, I rarely wade in. (for the regulars, the last time was with the swamp things)(To SteveG, you beat me to the submit button).
While it is not my intent to be rude, your analysis is superficial, sloppy and would garner a failing grade in 1st year finance.
1. Cost per consumer of $20. sloppy
Winstar is targeting businesses. The nationwide average cost per employee for telecommunications service is approximately $75 month + or -10%.
2. 10K of 417 million cash. superficial
If you had done any kind of research at all you would know Winstar just recently completed a 650 million offering at very favorable terms. I would agree that the stock market has some ridiculous valuations based on market cap, but lenders don't buy into that cr*p. One does not get the kind of funding just closed and at favorable rates, unless the company is EXECUTING.
3.< I frankly have no idea how to depreciate wireless equipment, and I'm sure the Winstar boys don't either.> Grade F
You're analyzing a company and then claim you don't know how to determine the fair value of its existing assets? Furthermore, you then you resort to an ad hominen attack against the company's financial staff in a superficial attempt to distract from your own ignorance. If you have some factual basis to allege gross incompetence or fraud, let's hear it -- or shall we just turn the mirror around.
4. < ...why don't we spend a little time on meaningless things like financial statements.> Sophmoric
When valuing a company, the financial statements are where you start. It is also the tip of the iceberg. Pick up any text on valuation, 3 techniques are prominent: comparable sales, discounted future earnings and discounted cash flow. One example of market comp has already been presented to you (Teleport). I suggest you look at the whole sector. One can't do DFE w/o earnings so one is left with DCF. That's what Steve is giving you with Vogel's analysis. DCF is the most extensive and detailed valuation technique. Yes, multiple assumptions are made and slight changes in specific assumptions can have significant impact on the valuation (its called sensitivity analysis, for first year finance folks). However, if you have not done your own analysis and can specifically cite errors in other peoples work with hard, reputable and verifiable data, then the ethical course is to keep quiet until you can.
The bottom line is that this is a start-up executing a nationwide play in the telecom business. After you have done your homework, come back and tell me how much capital is required, what is an appropriate debt/equity ratio (financial leverage) and weighted average cost of capital on a year-by-year basis, when on average should it turn EBITDA positive and what is a reasonable revenue ramp for competent management. When you can intelligently talk about competitive advantage (and whether this company has it) industry climate, future trends, and a host of other boring and inconvenient facts, then we can discuss share price. |
