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Technology Stocks : WCOM
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To: Caxton Rhodes who wrote (4385)5/5/1999 6:17:00 AM
From: limtex  Read Replies (2) of 11568
 
CR -

Its OK to advance arguments for the NXTL acquisition and to analyze its pros and cons but it is not OK to compare a NXTL acquisition with the MCI acquisition.

MCI was a fantastic comapany with a massive franchise, the #2 international carrier in the US, a World class player. It was profitable and even so laden with overhead and redundancy and synergy savings that could add hugely to the bottom line of the combined enterprise for years ahead. There were also other bidders for MCI. Bernie got MXI after a struggle.

Who else wants NXTL at the sort of prices being bandied about? What overhead is there to cut back. The sales growth NXTL may experience is going to be in what is to become the most cutthroat business in the World namely the US mobile market. Margins are set to drop out of site as all those who would seek the easy money of the mobile market realize they aren't going to make any money in it.

The European mobile companies can only make money because of the restrictions which help reduce competition. Thats how they can charge their customers so massively and get away with it. The US mobile market is just about the most unrestricted market in the World and the competition is going to heat up to white heat. It wouldn't surprise me to see mobile being given away some time soon. And disposable mobiles don't seem that far off either.

Best regards,

L
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