Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: MangoBoy who wrote (3927)	1/11/2000 7:23:00 PM
From: Robert Sheldon	Read Replies (3) \| Respond to of 15615

GLOBAL CENTERS – Keep the valuation guidance simple. We I guess it is time to get back to justify why I think GBLX is ridiculously cheap rather than speculating on its future partners . . . :-) I have selected two companies that should be range measures by which to evaluate Global Center (GC) when it is spun off. EXDS focuses on larger business markets while VRIO focuses on the small and mid size business markets. I have settled on evaluating these companies by market cap per square foot of space available for operations and by price to gross sales. You can draw your own conclusions. First a little about the dynamics of the business: Based on various sources (as well as other analyst reports) the cost of building data centers is “approximately” $300 per square foot. When filled to capacity these same data centers can see lease rates in excess of $900 per square foot per year depending on bundled services, service levels and other items (hint: are they permanently connected to a network, or are the lines leased?). These sure are nice metrics . . . that comes out to a minimum 3:1 payback on invested capital. Of course there are minimal expenses involved with keeping the centers running to account for, but we are going to keep this simple for now (until we have hard numbers when GC starts to report). Square footage engaged expected by Q4,1999 reporting. VRIO 200,000 GC 600,000 EXDS 1,500,000 Now lets look at “market cap per square foot of space available for operations” VRIO $23,250 (Actual) EXDS $11,800 (Actual) GC market cap. range estimate $7.08BB to $13.95BB Next look at “price to gross sales” VRIO 20X EXDS 105X GC range estimate* $10.8BB to $56.7BB *Based on $540MM in revenues I'm willing to bet that GC should be valued significantly higher than the ~$10BB the low end numbers above indicate. All this and GBLX trades at a significant discount (30% to 60% as a multiple of revenues) to competitors such as COLTY that do not have the comprehensive network, services, or anything else for that matter that GBLX has. Anyway this is a quick and dirty way I'm looking at GC.