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 : Softbank Group Corp -- Ignore unavailable to you. Want to Upgrade?

To: ghengis2 who wrote (4915)	4/22/2000 5:39:00 PM
From: RobertSheldon	Respond to of 6020

Has anyone here seen a specific (or any) value assigned to the Terabeam investment in a published calculation of 9984's worth? Folks around TeraBeam have been rather quiet about its "valuation" or even the amounts others have paid in for ownership. I have been able to establish this much: Next to management, SoftBank is one of the top 3 investors as a percentage of ownership. I bet it is north of 10%. Why is this important? Well, as was mentioned, LU paid $400M (for just 30% of the manufacturing arm) PLUS gave TeraBeam its Intellectual Property Rights from its "Optic Air" technology (point to point fiberless optics versus TeraBeam's point to multipoint). Not only that LU also agreed to be TeraBeam's banker via a large vendor financing facility. lucent.com SoftBank owns an interest in TeraBeam which in turn allows interest in BOTH the services arm of TeraBeam AND the manufacturing arm. I bet TeraBeam will address a "going concern" value of more than $5B. It is rumored that both arms will be brought public later this year or at the latest next year. Reasoning for this is the TeraBeam plans to roll out 100 cities over the next four years and needs the cash to do it. Some may ask (as I have) why go public when LU is there as a Banker . . . it all boils down to this: Weighted Average Cost of Capital. What this term means is that for every company, there is an optimal capital structure to be had - one consisting of debt and equity. The "cost" (dillution) of equity for a large scale, quick, rollout of TeraBeam would probably be less costly than with debt (espicially in this environment). Why am I telling you all this? This basically ensures that we will have TeraBeam's implied value show up in SoftBank's shares when the two TeraBeam arms come public. If TeraBeam's manufacturing arm is valued at $1.333B now (LU paid $400M for 30%), the services arm is probably worth several multiples of that due to the reoccuring revenue stream - thus getting us near the $5B now. My hunch that they will not bring the company public until they make some additional progress and sign up some heavy hitters as customers. So we could see the evaluation of TeraBeam multiply several fold. For now though, I'm resting well thinking that SoftBank just turned $15M to $20M (not totally sure of exact amount) into $500M+.