TELSCAPE (TSCP on NASDAQ)HAS GROWN LIKE CRAZY IN 1997 Message Board

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Technology Stocks : TELSCAPE (TSCP on NASDAQ)HAS GROWN LIKE CRAZY IN 1997

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To: Stephen D. Wilson who wrote (67)	7/13/1998 8:11:00 AM
From: David Edwards	Read Replies (1) of 87

Steve, The bankruptcy of TCCF hits Telscape in a couple of ways: 1. Outright loss of revenues (our estimate about $14 million, in 1998) 2. Write-off of receivables (couple $mil.) 3. Distraction of management, increased expenses (couple $mil.) However, Telscape was using TCCF temporarily while its own calling card facility was being built in Houston. This facility will be operational in August, so the revenue stream from MSN is only slightly disrupted. Even with the bankruptcy, we estimate revenues from MSN at $50 million in 1998, which exceeds the purchase price just this past January. As a result of switching to an internal facilities, Telscape's accounting for calling card sales will be changed. Previously, 100% of the revenues from these cards was booked to current quarter earnings because it was TCCF's responsibility to service the card. Going forward, revenues from these cards will be booked as the cards are used. So revenues from sale of these cards that were booked immediately will now be spread over several quarters. Best regards, David Edwards, President Heron Capital Management, Inc. (800) 99-HERON heroncapital.com

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