Broadband Wireless Access [WCII, NXLK, WCOM, satellite..] Message Board

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Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..]

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To: SteveG who wrote (259)	5/28/1999 4:21:00 AM
From: SteveG	Read Replies (1) of 1860

CSFB/Governali/Littlefield - WCII: Possible Conversion Of Bonds On June 2, Has Positive Implications BUY MID CAP $57.875 WinStar Communications (wcii) Possible conversion of 14% sr sub notes into 5.9 mil shares of common stock on June 2, has positive implications. Summary If WCII's stock closes above $42 3/8 on June 2, its 14% sr sub cvt notes can cvt into 5.9 mil common shares. If it closes below $42 3/8, the price will reset for another 30 days. There are several positive implications for earnings that would correspond with this event. First, debt would decrease by $122.3 million, reducing total long-term debt to $1.4 bil. The notes accrete interest expense at 14% annually. If converted, reported 1999 interest expense would decrease by nearly $10 mil. Second, the anti-dilutive impact of additional shares would reduce our estimated 1999 EPS loss to $12.61 from $14.05 ( including the impact of reduced interest expense of about $0.20 per share.) Third, our DCF derived year-end 1999 price target of $70 already assumed the conversion of the notes to calculate fully diluted shares outstanding and the related decrease in debt. Thus, no change. Price Target Mkt.Value 52-Week 5/25/991 (12mo.) Div. Yield (MM) Price Range $57.875 $70 None $3,842.9 $10 - $55 Annual Prev. Abs. Rel. EV/ EBITDA/ EPS EPS P/E P/E EBITDA Share 12/00E (12.33) NA NA (3.11) 12/99E (13.88) NA NA (6.00) 12/98A (11.96) NA NA (5.12) March June Sept. Dec. FY End Dec. 31 1999E (3.72)A (3.72) (3.38) (3.08) 1998E (2.54) (2.77) (2.83) (3.80) ROIC (12/98) Total Debt (3/99) $1.526 Book Value/Share (3/99) NM WACC (12/98) Debt/Total Capital (3/99) 100% Common Shares3 66.4 EP Trend2 Est. 5-Yr EPS Growth NM Est. 5-Yr. Div. Growth NM 1On 5/25/99 DJIA closed at 10531.1 and S&P 500 at 1284.4. 2Economic profit trend. 3Shares outstanding reflect fully diluted shares. WinStar is a competitive local exchange provider using 38 GHz technology to build out local telecom networks in major markets throughout the country.

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