Bernard:
As uusal, you are the only one of the bunch who consistently makes sense, and consistently makes a valid bullish case for Winstar. It is a pleasure to hear your points of view. But then I expect nothing less from a professor.
As usual, you make a compelling argument. It does indeed appear that Winstar has excellent telecom management, which in this very competitive telecommunications business, I agree is a tremendous plus.
Let me try to make a few clever points of my own. As I'm sure you would agree, Winstar does not have a monopoly on seaseoned telecom management. MCI has it. SBC has it. WCOM has it. Airtouch has it. And the list goes on and on. One of my main points all along has been that the telecommunications industry is very uncertain. Winstar could turn out to be in a winner. It could also turn out to be a big loser. It's certainly not a home run at these valuations.
And there in comes to my second main point, debt levels, negative net worth, and all.
Everyone of you is buying the common equity. Essentially, the last one in line to be paid.
Now this equity could be worth a bundle. But it could also be worth a lot less. It is after all equity in an enterprise that has a certain worth to be sure, but certain financial and technological risk as well. Unless the "hoped for takeover" comes, your equity will not be worth $50 a share come July, and probably a lot less. It's the inevtiable law of economics.
All the warning signs are there. Dilution of equity, exchange of equity for debt, negative net worth, high interest costs, continuing operating losses for the next 2 years, not to mention "Wall Street Self Interest", if not outright manipulation..
Are you saying that given all that, and a market that's quite toppy, there won't be a better opportunity to buy the common equity at cheaper prices some time over the next 3 months?
As for beloved management, notice they have already paid themselves a bundle. This doesn't mean Winstar's vision won't come true. But even if it doesn't, management will walk away with a tidy sum for trying.
Can all of you say the same?
Regards,
JC
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