Ali:
<<Do you see a market and future for what WCII is doing ?>>
The short answer is yes. Wireless local loop is a viable solution to the last local mile problem, and Winstar's frequencies and rollout put them ahead of most of their competition.
<< Forget the price and earnings etc.>>
I think this is the mistake many investors make. They see a promising technology, with potential, and therefore overly discount the risks inherent in rolling out this business. There are literally hundreds of biotech companies with seemingly limitless potential, but the uncertainty surrounding their cash flow (and burn rate) makes them fundamentally poor investments.
Winstar may be a little different, although I believe they suffer from much of the same problem. Think of it this way. If I told you I had a surefire way of turning water into oil in my basement, but that it would take me 20 years and $1 billion to develop, would you fund me? First, you would discount my technology, no matter how promising it seemed. Second, you would discount the possibility that oil would be obsolete in 20 years. What happens if somebody else optimized solar energy or ethonol for a car?
In my opinion, Winstar is like the oil in the basement story. It costs huge capital to build an infrastructure, but the payoff seems valuable given today's paradigm. By the time the system comes on line and cash flow is returned to investors, who's to say the paradigm hasn't shifted? What if XDSL improves, or direct access to satellites becomes available? What if there is something else out there, that none of us can forsee? What happens to your cash investment then?
In bull markets, investors are willing to ignore these possibilities. The rewards for being right seem too enormous. Indeed, many on this thread continue to focus on "greed" of the proposal. But investments carry risk as well, usually in the form of lower earnings. Winstar's proposal is too binary. It's either a winner, or it loses everything.
Saleable in a bull market, but not something most investors are comfortable with when risk seems more apparent.
Regards,
JC |
