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

To: mthomas who wrote (2576)	10/11/1999 8:20:00 PM
From: mthomas	Respond to of 15615

Interesting take on the fiber acquisition business, purloined from Briefing.com: 10:39 ET ****** Global Crossing (GBLX) 35 13/16 - 11/16 : There are two revolutions going on right now: the telecom revolution and the internet revolution. Both use fiber optic networks extensively. Ownership of fiber networks is becoming increasingly valuable. A key to understanding this value is understanding the economics of a fiber network. Building a new network, laying the physical cable, and making installations, is expensive. Adding new capacity is much cheaper. Typically, doubling the number of circuits in a nework (each of which is leased to a client), costs less than 10% of the cost of building a new network with the same number of circuits. The cost per circuit can then be dropped, further increasing demand. This means that someone trying to enter the fiber network business now faces higher and higher barriers to entry, as the cost of their new circuits will be much higher than the expanded existing network. The economics of adding capacity means that fiber networks will begin to be acquired rapidly when demand increases. It looks like that day is arriving as Global Crossing acquires Racal Telecom, a UK based fiber network leasing company for $1.65 billion in cash. Global Crossing just closed their acquisition of long distance company Frontier two weeks ago. And in the midst of all this, it is rumored that Deutsche Telekom is interesting in buying Global Crossing. Last week, Bell Atlantic invested $1.7 billion in Metromedia Fiber Network (MFNX), another company that leases fiber network capacity. The interest in buying existing fiber networks is only going to increase over the foreseeable future. Consolidation in the fiber network is inevitable, but it now appears it will happen faster than most thought. Global Crossing is in that awkward position of being big enough to be an acquirer, but not so big that it couldn't be acquired itseslf. Although all of the fiber companies are expensive, the value to larger telecom players will someday be recognized. Global Crossing is down today, as is common when a company makes a big acquisition like this (especially on the immediate heels of another), but it may be a buying opportunity if someone like Deutsche Telekom decides they better get their fiber network before it gets too expensive to buy. - RVG

To: mthomas who wrote (2576)	10/12/1999 5:59:00 AM
From: John Biddle	Read Replies (1) \| Respond to of 15615

...these guys may not care too much about shareholder value at this moment in time, but down the road it will look like they were doing the best they could to increase shar-HOLDERS' value, not momentum players' value. Do you believe that management doesn't care about shareholder value, or are you just unsure? My belief is that the long term value of the company is the only thing the company should be worried about. Any effort to prop up the current price comes at the expense of effort better spent on building the business. You see the long term approach management is taking, so don't worry.