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To: Lane3 who wrote (11556)	9/29/1999 7:46:00 PM
From: DubM	Read Replies (1) \| Respond to of 12468

Vogel talks: WinStar's Vogel on Drop in Share Price, Guidance: Comment San Francisco, Sept. 29 (Bloomberg) -- Bill Vogel, senior vice president of strategic planning at WinStar Communications Inc., comments on the recent drop in the company's share price and its revised guidance to analysts about its performance in 2000. The company's shares fell 7.3 percent today after a 22 percent slide yesterday. WinStar provides voice and data services to business customers using wireless links and dinner plate-sized antennas. Vogel was interviewed at a Banc of America Securities conference in San Francisco. ``Our third-quarter results are tracking extremely well. We'll be announcing those results on the second of November and we're confident those will meet or exceed the overall earnings estimates and revenue estimates.' ``There was some confusion and a little bit of misinformation in the market yesterday. There were some rumors yesterday that the company was preannouncing an earnings miss for the third quarter; that simply was not true. There was also some confusion regarding year 2000 guidance. We expect to have a very solid year in 2000, with continued growth in revenue, gross margin, along with declining EBITDA losses. ``There was a wide range of estimates out there for year 2000, and over the last several days, after discussions with us, several analysts revised their estimates for 2000, tightening up the range. But, for the most part, analysts' estimates will show strong growth with revenue growing by about $200 million next year to somewhere in the mid-$600 million range. That's still very strong growth, that's in excess of 50 percent growth off of our base. ``But I think for some analysts that was representing what I'd refer to as a trim as opposed to a haircut. Gross margin continues to improve as we drive more and more traffic on-net, and as we continue to see very strong activity in a new line of business that we have, which is wide-area network, national data network sales, where we have in excess of $300 million of contracted backlog revenue, which has very high gross margins, well in excess of 70 percent.' ``EBITDA losses are slated to drop in half from 1999 to year 2000, with a 2000 EBITDA loss in the $140 million to $150 million range. . . The core business is in great shape. There's no earnings hiccup in store for the third quarter. This market reaction really amplifies the fact that there are some momentum- style investors, and they see a change, and they want to shoot first and ask questions later.' ``We are moving to putting bandwidth in buildings. The whole WinStar concept, forever, has been to take a 10 percent share in voice to pay for the broadband network, and then drive that broadband network with applications and services to transform the businesses that are in these buildings that don't have fiber in them.' ``Focus is the issue. We do not want to have a large revenue number out there, where we're going to be compelled to resell lines at very low margins just to make our revenue numbers. That doesn't make any sense. That means that we'd then have to migrate traffic onto our network at some point in the future at substantial cost. So the name of the game is allocating your resources as optimally as you possibly can, and if we get distracted with a lot of resale activity, we then have to clean up later, there's a lot of cost there. ``It makes much more sense for us to have a focused approach, perhaps have suddenly lower overall revenue, but have better margins. You have 10 to 20 percent gross margin when you resell a line, you've got 70 percent gross margin when you have a line that's on-net. So what we want to do is discipline the company to be focused on an on-net strategy because where we're on-net we also have the full product line to include data. When we resell we don't have that.' Sep/29/1999 18:23 For more stories from Bloomberg News, click here. (C) Copyright 1999 Bloomberg L.P.