Re: The IIOnline Article: Spotting Internet Losers
Thanks for the post. The article seems very poorly researched and thought out.
First of all debt can be a very effective and intelligent way to raise cash without substantial dilution. The article states that @Home has debt or more than $450 million, while citing @Homes recent, small revenue number. It fails to account for @Home's dramatic revenue growth rate. So, if the article were written at the end of 1999, it may say that @Home has debt of $450 million and revenues of $200 million. At the end of 2000, debt of $450 million, revenues of $600 million, and so on.
The article does not cite the maturity date of @Home's debt either. So, if the debt matures in 2000, I would be afraid. If it matures in 2007 or 2008 or later, as I would suspect, its not a near-term worry. If @Home doesn't have the cash flow to service $450 million in debt by the year 2005, it won't make a difference if the company has a billion in debt or none, we stock holders will be dead in the water because the company's story will have unraveled.
Finally, if @Home is making a go of it and its technology and relationships remain big positives, it would likely not be very difficult to refinance the debt.
Regards,
NoMore |
