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Technology Stocks : ARCC -- Ignore unavailable to you. Want to Upgrade?

To: akmike who wrote (73)	10/3/2000 8:12:38 AM
From: DukeCrow	Respond to of 83

It looks like ARCC is sacrificing some growth for earlier profitability. This also means they are slowing their build-out somewhat. Not a big deal as long as no other BLECs build-out in some of ARCC's future buildings before they do (no exclusivity in a lot of their contracts as far as I know). Being the first broadband provider in a building is important. Given the state of the capital markets, ARCC's competitors are no doubt in the same situation as ARCC; Cypress Comm announced slower growth and deployment on Sept. 26. Also, revenue estimates for 2001 were cut from $80MM to $50MM. Build targets are now 800MM sq ft by 2004, down 20% from previous plans, and 100MM sq ft in 2001, down 60% from prev plans. It already seems to be priced in by the market, though. The upside to all this is that Crawford and Doshier have come up with a solid path to profitability even in the face of extremely rough capital markets. If the environment becomes more favorable over the next couple of years, ARCC will have the option of being much more aggressive. Any shareholder who was negative on the secondary offering earlier this year for whatever reasons should take note of how fortunate it was for ARCC to raise money at those prices. That stroke of good luck is what will allow ARCC to focus on its business from here through 2003 and beyond instead of wondering whether they'll still be in business in 2003. Ali