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To: Ditchdigger who wrote (37734)	1/15/2000 7:55:00 PM
From: ztect	Read Replies (1) \| Respond to of 44908

Ken......... Cursorily looked through EXDS's SEC filings and couldn't find any info on executive compensation. Wanted to confirm your salary figures, and also wanted to see compensation in lieu of salary ie. options plus shares held. Many CEO's take neglible salaries because income at that rate is taxed at 39% whereas taxes on long term capital (deferred compensation ie. options) gains is 20% From the IPO and stock price, I'd imagine the CEO probably is worth many hundred millions of dollars already. W/o a complete overview of compensation, you're really comparing apples to walnuts. What I did find out about EXDS was very interesting. The 40% growth number seems a bit deceiving, since growth is accounted for through leveraged acquisitions. From what I quickly culled, net losses at EXDS are also increasing from operational costs, and that these losses far excede the net revenues. Below are some excerpts from the last report. My comments are in italics. With losses this excessive, I'd imagine most employees for this company have substantial stock option incentives. Did you read all the registration statements? Again, I only looked at these quickly. This company doesn't look like it can justify its 18 bill market cap on current earnings (there aren't any). This looks like this stock's valuation and market cap are based on future expectations not unlike other 'nets'.. Interestingly this company bought Cohesive, the company Hwang came from. Moreover, this company looks like substantial financing is what keeps it afloat, and not the revenues from current operations. Net losses increasing Net loss (in thousands)............. EXDS first 9 months '99 .... (77,376) Net loss............................ EXDS first 9 months '98 .... (45,392) Substantial financing and debt From inception through September 30, 1999, we have financed our operations primarily through private sales of preferred stock, our initial public offering of common stock in March 1998, our senior notes offerings in July 1998 and June 1999, our convertible subordinated notes offering in March 1999 and through various types of equipment loans and lease lines and working capital lines of credit On July 22, 1999, the Company amended its revolving line of credit agreement with a financial institution, increasing the total commitment amount from $7,000,000 to $10,000,000. Substantial recent financing required On December 2, 1999, the Company issued a press release announcing that it sold a total of $900 million aggregate gross proceeds through private offerings of senior notes and convertible subordinated notes. The size of the offerings was increased from the $500 million previously disclosed. The Company sold approximately $500 million aggregate principal amount of 10-3/4% Senior Notes due 2009 (including Euro 125 million of 10-3/4% Senior Notes due 2009) and $400 million aggregate principal amount of 4-3/4% Convertible Subordinated Notes due July 15, 2008. Continuing losses, which in the longterm, hopefully will be offset by growth of revenue from acquisitions We experience further losses from sales personnel hired to test market our services in markets where there is no, and may never be an, Internet Data Center. As a result, we expect to make investments in expanding our business rapidly into new geographic regions which, while potentially increasing our revenues in the long term, will lead to significant losses for the foreseeable future. Gross revenues are up percent wise because revenues from acqusitions are factored in Our revenues increased 345% to $140.8 million for the nine month period ended September 30, 1999 from $31.6 million in the same period of the prior year. This growth in revenues was the result of increases in the number of new customers, substantially all of which were Internet Data Center customers, increases in revenues from existing customers and revenue contributions from Cohesive. Cost of revenues (operation costs) increased substantially also w. acquisitions Cost of service revenues increased from $2.5 million in 1996 to $16.2 million in 1997 and to $59.3 million in 1998. Our cost of service revenues as a percentage of revenues increased from 81% in 1996 to 131% in 1997 and declined to 112% in 1998. Cost of revenues increased 202% to $118.8 million for the nine month period ended September 30, 1999 from $39.3 million in the same period of the prior year. Other costs also doubled Our marketing and sales expenses increased 106% to $42.5 million for the nine month period ended September 30, 1999 from $20.6 million in the same period of the prior year. Our net interest expense increased to $20.0 million for the nine month period ended September 30, 1999 from $5.1 million for the same period of the prior year -------------------------------------------

To: Ditchdigger who wrote (37734)	1/15/2000 10:13:00 PM
From: Suzanne Newsome	Read Replies (1) \| Respond to of 44908

Ditch, if EXDS is reporting losses, why does it have a 15 billion dollar market cap?

To: Ditchdigger who wrote (37734)	1/15/2000 10:15:00 PM
From: Suzanne Newsome	Respond to of 44908

Ditch, how can EXDS have 14 quarters of 40% growth and still not be making money? Is that mathematically possible?