This week's Barron's cover story: "The Best Phone stocks in the Universe"
interactive.wsj.com (i think it is still a subscripion only site)
Global Crossing was mentioned positively several times and is #4 on Jack Grubman's pick list.
Here are some of his comments:
Grubman: As I said earlier, bandwidth is the enabler for the next great leg of telecom growth worldwide. For the long haul, Qwest Communications, Global Crossing and Level 3 Communications all are building high bandwidth assets that will allow them and others to see the dream of multimedia video applications become reality. All three are discounted-cash-flow stories.
What's interesting is, if you ask yourself what revenue stream will be needed in 10 years to justify current prices, the answer is $50 billion among them. This translates into only 6% of the probable addressable market out there over the next decade, so it's not an unrealistic number. This trio of New Age companies is building bandwidth in the U.S. and outside it. Either on their own, using their currencies, or being acquired, they'll continue to create a ton of stockholder value. Why? They're building hard assets that will drive the growth of many industries.
Q: Does the proposed merger of Global Crossing and US West make sense?
Grubman: Full disclosure. Salomon Smith Barney is advising Global Crossing. I really shouldn't comment, but I will say that this deal is a financially elegant solution that will create value.
Castro: Jack, come on!
Grubman: You basically are trading data assets out of US West, which actually are quite good but never have been rewarded, into Global Crossing, thereby creating a growth tracking stock. At the same time, you're trading Frontier's local telephone companies out of GBLX and into USW to create a value stock. It will have a high dividend payout and modest growth, while the growth tracker will boost cash flow by 50% a year.
Q: We hesitate to ask this, but are Global Crossing and Qwest today in anything like the position that WorldCom was a few years ago?
Grubman: Let me put it this way: Both are hoping to become WorldComs. It remains to be seen whether they do, but they're in the same vector. |
