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Technology Stocks : GST Telecom (GSTX) 4th quarter earning -- Ignore unavailable to you. Want to Upgrade?

To: MangoBoy who wrote (259)	12/1/1999 1:38:00 PM
From: SteveG	Read Replies (1) \| Respond to of 369

(got out monday 9ish) This from Heger at AGEd yesterday: ESTIMATES ADJUSTED FOLLOWING THIRD QUARTER RESULTS ------------------------------------------------------------------------------ GST Telecommunications, Inc. (GSTX/8 9/16) BUY/SPECULATIVE ------------------------------------------------------------------------------ We have adjusted our 1999 and 2000 estimates for GSTX following the release of third quarter results. We have increased 1999 revenue slightly, to $303.3 million from $302.7 million based on the strong revenue results in the third quarter. We have dropped our 2000 revenue estimate, however, from $400.0 million to $365.5 million, due primarily to lower revenue per line assumptions for local dial tone services and a more conservative ramp-up for data services. These decreases will be partially offset by a stronger outlook for private line services, as GST leverages its local and long haul fiber facilities to lease high-speed capacity. We have increased our 1999 EBITDA estimate to $6.7 million from $5.0 million, primarily due to a higher than expected result in the third quarter. We have decreased our 2000 EBITDA estimate to $20.9 million from $45.3 million based on the lower revenue expectations. GST's results for the fourth quarter will be under close scrutiny due to a shortfall in telecom services revenue in the third quarter. We feel our estimates represent conservative expectations that the company should be able to meet. We have decreased our fourth quarter revenue estimate to $78.3 million from $83.6 million. This decrease is driven by several factors. We have dropped local dial tone revenue from $19.9 million to $17.5 million. Our previous estimate was somewhat aggressive on a revenue per line basis; however the new estimate may be conservative since GST has added $1.6 - 2.5 million per quarter in dial tone revenue in each quarter this year vs. an estimated $1.3 million in the fourth quarter. We have also decreased our estimate for data services revenue (dedicated + dial-up) from $9.7 million to $8.2 million as the company has been de-emphasizing its low margin dial-up business and focusing on dedicated access. We have decreased our estimate for long distance revenue to $15.9 million from $16.9 million as we anticipate that legacy long distance revenue will decline for one more quarter. We have increased our estimated private line revenue to $12.5 million from $10.4 million as the company is focusing more of its sales efforts on leasing capacity on its local and long haul fiber networks. We have decreased our estimate for construction and facility sales to $22.8 million from $25.4 million since a greater portion of the conduit Williams Communications is buying from GST will not be delivered until next year. Our 1999 revenue mix reflects our fourth quarter changes and the third quarter results. We have decreased local dial tone revenue to $61.1 million from $64.2 million due to the change in our fourth quarter estimate. We have decreased data services revenue to $30.3 million from $32.7 million as well. We furthermore have decreased long distance revenue to $69.1 million from $70.3 million, again due to pricing pressure in the legacy long distance business. In contrast, estimated private line revenue has increased to $43.9 million from $40.9 million due to the increased focus on this business and a stronger than expected result in the third quarter. We have also increased construction and facility sales to $93.8 million from $89.9 million due to the strong results in the third quarter. Our 2000 revenue estimates further reflect the themes we have already discussed. We have dropped local dial tone revenue to $90.5 million from $127.5 million due to revenue per line expectations that were previously too aggressive. We have decreased data services revenue to $48.3 million from $56.0 million due to a more steady ramp in this business as well. We have also decreased estimated long distance revenue due to the lower base of legacy long distance revenue entering 2000, which should be offset by growth from local customers that also purchase long distance. In contrast, we have increased our estimate for private line revenue to $80.4 million from $64.7 million. We support the company's efforts to lease capacity on its local and long haul fiber networks. Significant demand for fiber transport services exists along GST's West Coast route and in many of its local markets. GST should tap into this demand and generate recurring lease revenue, rather than making facility sales that are one-time in nature. We expect that CLECs that own significant fiber facilities, such as GST, may return to some degree to their competitive access provider roots and generate more revenue from leasing private line capacity. We have adjusted our gross margin and SG&A assumptions. We have increased our estimated fourth quarter gross margin to 41.5% of revenue from 38.2% of revenue due to the favorable impact of construction and private line revenue. In contrast, we have increased our SG&A estimate to 39% of revenue from 35% of revenue, reflecting the company's plans to increase its sales force. Our 1999 gross margin estimate has improved to 39.1% of revenue from 37.4% revenue, while SG&A expenses have increased to 36.9% of revenue from 35.8% of revenue. For 2000, our estimated gross margin remains basically unchanged at 42.2% of revenue, while SG&A expenses have increased to 36.5% of revenue from 31.0% of revenue, again due to expected increases in the sales force. Our net loss per share estimate has improved in 1999 but declined in 2000. We have changed our fourth quarter estimate to ($1.42) from ($1.38) due primarily to a slightly lower EBITDA estimate for the quarter. Our full 1999 estimate has, however, improved to ($5.05) from ($5.18) due to the better than expected result in the third quarter. We have changed our 2000 estimate to ($5.00) from ($4.20), primarily due to the lower EBITDA estimate in 2000 and higher estimated depreciation expense. The pressure is on for GST to deliver results. After pre-announcing a revenue shortfall for telecom services in the third quarter, investors will be watching fourth quarter results closely to ensure that that the company can beat fourth quarter expectations. We feel that the company is providing conservative guidance for the quarter to ensure that it does not offer any downside surprises. We have witnessed other CLECs miss a quarter and rebuild credibility once they steer results back on track. We feel that GST has the potential to do the same. Regardless, we think the company is undervalued considering the assets it has in place. If management cannot deliver results from these assets, however, we feel it should seek a sale of the company to another carrier that can.

To: MangoBoy who wrote (259)	12/7/1999 9:46:00 AM
From: MangoBoy	Respond to of 369

[GST Telecommunications Activates Local Network in Houston] Metropolitan Fiber Ring Further Integrates Key Texas Market Into Core ICP Operations VANCOUVER, Wash., Dec. 7 /PRNewswire/ -- GST Telecommunications, Inc., a leading Integrated Communications Provider (ICP) in California and the western United States, today announced the activation of its metropolitan area network in Houston, continuing the integration of that key Texas market into its core ICP operations. GST turned up its 38-mile multiple conduit fiber backbone through Houston's central business district, connecting with its previously-deployed voice and data switches. GST is now poised to offer a broad range of facilities-based voice, data, and integrated communications solutions to Houston business customers over its own next-generation fiber optic network. "One of GST's key focuses has been the integration of strategically valuable business units that we've acquired into our core ICP operations," stated Joe Basile, president and chief executive officer of GST. "Texas is one of the fastest-growing telecom markets in the country, and the activation of our local network in Houston is an important step forward in our efforts to expand our presence there and elsewhere in the state." GST entered Houston in 1996 with its purchase of TotalNet Communications, a full-service long distance provider. With the installation of voice and data switches, the Company added local dial tone, data, and Internet services to its Houston portfolio. The activation of its local fiber backbone continues the process of integrating its Houston facilities into GST's core ICP operations, connecting that city to the Company's next-generation Virtual Integrated Transport and Access (VITA) network. One of the first of its kind, the VITA network utilizes cell, packet, frame, and IP technology -- along with advanced switching equipment -- to carry both voice and data traffic over a common network architecture, providing enhanced service offerings and superior economic performance to GST and its business customers.