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To: Mark Fowler who wrote (106973)	8/7/2000 12:42:37 PM
From: H James Morris	Respond to of 164684

I bought a recent IPO Genuity (Genu) last week @ $8. I didn't like the large # of shares that were issued, but the market seems to have swallowed them up...so lets see what happens. GETTING BEHIND GENUITY by Todd Truitt Related Stories: streetadvisor.com Genuity [GENU] reported earnings beating our estimates (and those on the Street) on earnings per share, cash flow, and revenues. The company continues to grow its value-added service business segment (including web-hosting services) at an exponential rate, which in our mind is the key driver for the stock. While the financial engineering behind the spin-off of Genuity remains an issue, we believe the market has more than priced this risk into the stock. After this stellar quarter and a dip in its stock price, we are issuing a buy rating on Genuity. See Table: streetadvisor.com Genuity's high-value hosting business grew from 8% of total revenue to 15%in 2Q00. We believe this, and other value-added services, will be the main push behind valuation expansion in the future as the market awards richer valuations for these types of services vs. traditional access services. Additionally, revenue per hosting customer was up significantly in the quarter from $106,000 to $280,000. While dial-up and dedicated revenues were relatively in line, the company's non-AOL revenue doubled for the quarter, a pleasant surprise. Operational expenses growing 56% in the quarter, a slowdown from last year, signifies to us that expenses will continue to decline, especially within dedicated access. We believe this should help offset some of the price erosion we expect to see in the future on the traditional access side. Additionally, we believe an increasingly more profitable value-added service business segment should help offset traditional access' weakening margins. At the end of the day, this is the only publicly traded Internet backbone play. Not only does it give investor's liquidity, with a $6 billion market cap and a $1.5 billion float, but it also looks relatively cheap. We would be buyers at these levels.