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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: John Carragher who wrote (2427)	10/7/1999 5:29:00 PM
From: Mazman	Read Replies (1) \| Respond to of 15615

Who is stalking Global Crossing? smartmoney.com BELLSOUTH (BLS) and Deutsche Telekom (DT) both need long distance partners in the U.S. Global Crossing (GBLX) just finished acquiring Frontier, the fourth-largest U.S. long distance company. How convenient. That's what investors seemed to think, anyway, as they bid up Global more than 13% today. The company did produce some hard news with the resignation of Frontier President Rolla Huff and the appointment of Frontier Chairman Joe Clayton in his place as chief of North American operations. But that shouldn't have surprised anybody. Nope, this looks and smells like merger speculation a day after the market digested MCI WorldCom's (WCOM) $129 billion offer for Sprint (FON). And it's not dumb speculation, either. Global Crossing has a lot to love for a beleaguered telecom incumbent. While it was acquiring Frontier, Global announced plans to build 10 Web-hosting centers in Europe (take that, MCI WorldCom). It bought the submarines that lay cables underwater (hello, cost savings). And it hooked up with Softbank and Microsoft(MSFT) to build a network in Asia (how 'bout some emerging markets). Moreover, its stock is worth around half what it was fetching before it made its breakneck bid for U S West (USW). In other words, Global Crossing is sitting pretty. Deutsche Telekom is likely taking a look. The German phone company wants an international play. But it's been known as a stickler over price, and Global's cocksure execs might not stomach its bureaucracy. BellSouth, meanwhile, has recently (and embarrassingly) shown its desperation to become a long distance player. BellSouth holds 10% of Qwest Communications (QWST) -- the company that snatched U S West from Global. And when Global bought Frontier, it inherited use of a part of Qwest's network. BellSouth has said in the past that it wants more access to the Qwest network. And analyst Tom Friedberg of Janco Partners says buying Global Crossing would be one way to get it. "BellSouth has signaled to the marketplace that they have their eye on going national," says Jeffrey Kagan, a market researcher based outside Atlanta. "I'd bet they are now in serious talks with Qwest and Global Crossing and anybody else." Between the two BellSouth probably has a clearer regulatory path toward a merger than Deutsche Telekom. Kagan says recent U.S. megamergers have established a model for federal approval -- divestment of overlapping networks, sale of excess assets in a particular market and commitments to stoke competition in other regions. BellSouth, with its national wireless operation, could follow that model nicely. Down in Atlanta, BellSouth spokesman Jeff Batcher wouldn't get nailed down on the question of whether or not the market should expect another bid for a national network. But he did allow that anything is possible. And that possibility seemed to be enough to send investors on a Global Crossing buying binge.

To: John Carragher who wrote (2427)	10/7/1999 6:44:00 PM
From: quidditch	Read Replies (1) \| Respond to of 15615

John, good to see you over here (Q qomrades in arms): The failure of BellSouth stock to do so is being interpreted as significant, Burnett said. "The market is telling us that BellSouth has something up its sleeve," he said. Either that or the market is disappointed that BS didn't make the strategic acquisition that analysts thought necessary for it to get out of the station (re. why price didn't rise, as is typical when a suitor loses). Again, I for one am strongly opposed to a takeover here. Who wants 20 points from here on his/her position? Maybe the traders. In the long term scheme of things, that 20 points will mean nothing to our portfolios. I'd rather play the game as sketched out by Winnick, Scanlon, Clayton et. al. If we lose and the business model does not work or macro developments in the industry somehow don't go GBLX' way, so be it. If we win, that 20 points might seem as important as a gnat nibbling the rump of a hippopatumus. Even though the stakes are far higher for management, given the size of their positions (and where 20 points would run into real money), they had 62 from USW. Winnick knows the war rooms from DBL days. His sights are set high. Ours should be too. Regards. Steve