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Technology Stocks : WCOM
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To: Teddy who wrote (4153)4/8/1999 6:50:00 PM
From: Teddy  Read Replies (1) of 11568
 
From my pal SteveG:
Message 8787584
...Because of this view by WorldCom management, we do not see any possibility
that WorldCom will do a transaction with Nextel that will lead to dilution any where
near the 20% to 25% range that others are suggesting. Management is unwilling
to stomach anything more than mid-single digit dilution, even for the most strate-gic
asset. It is worth noting that the share price erosion that fear of dilution has
created is a major destroyer of shareholder value – WorldCom has lost nearly
$20 billion of market cap to this fear already. Management includes this cost as
part of its acquisition costs, which is why we are so confident of their discipline in
accessing this opportunity and all other investment opportunities.
Management Unwilling To Do A Deal With Significant Dilution
In our conversation with management we are reminded: that WorldCom's current
operations are hitting on all cylinders; there is no need today to do a wireless deal
to boost current growth; the company has a major distaste for dilution; wireless
deals are inherently difficult for wireline companies to do because of the absence
of operating synergies; and there is nothing so strategic to WorldCom at this
point that it is willing to absorb the 25% dilution that the press has sug-gested
from a Nextel deal. Finally, management reminds us that even mid-single
digit dilution is tough for them to swallow. WorldCom has looked at various
wireless investments for over a year and has consistently come away with the
view that so far the prices have been too high to justify the acquisitions....

Bernie, you da man!
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