I can give you some of my of research on LUser...I covered my short from Friday this morning below $6...
March 28...
IMO it is just a matter of time until LU goes belly up...If they can get financing beyond this is in doubt...The AGR spinnoff is not a grat success and they already were paid for the proceeds to a great degree...Maybe LU will survive like XRX if they can get financing in the future, but the stock will likely lose atleast another 50% of its value before then...The recent 'deals' LU signed were scalps, the margins were slashed to the bone IMO...
Usually after a spinnoff the stock falls anyway see COMS, T, etc...Bottom line IMO a company that loses over a BILLION DOLLARS IN 1 QUARTER IS A SICK COMPANY...
IMO it is just a matter of time They just floated their spinoff ipo agere at
Reprinted from my February 27th opinion on LU situation...Keep in mind that AGRa was supposed to net $6B fo LUser and reality was less than $4B which is spoken for already...Since LUser saddled AGRa with $2.5B in debt the asset value is nil IMO...
More on the LUser situation too...
cnet.com.
New York, Feb. 23 (Bloomberg) -- Lucent Technologies Inc. persuaded banks to provide $4.5 billion in new loans, enabling the biggest maker of telephone equipment to avoid a possible debt- rating cut to junk status.
The 364-day credit line, arranged by J.P. Morgan Chase & Co. and Salomon Smith Barney Inc., came after personal appeals to lenders by Chief Executive Henry Schacht and last-minute talks led by Chief Financial Officer Deborah Hopkins.
The new loans replaced a $2 billion line that expired at midnight last night. The remaining $2.5 billion will be assumed by Lucent's microelectronics unit, Agere Systems Inc., after its planned initial public offering. Lucent also amended a $2 billion five-year line, giving the company a total $6.5 billion in available bank financing.
''We are now moving ahead totally focused on executing the turnaround of our business,'' said Hopkins in a statement.
With the new lines, Lucent skirts possible ratings cuts by Moody's Investors Service and Standard & Poor's, which both lowered the company's debt to one notch above junk status last week. A cut to below investment grade would mean higher borrowing costs for the biggest telephone-equipment maker.
Typically, companies arrange to replace credit lines months before they mature to reduce the risk of losing a source of funding, or a backup for other short-term debt programs. The deadline talks reflected bankers' reluctance to lend to Lucent, which posted an operating loss in its fiscal first quarter amid declining sales.
''It's amazing what Lucent has had to do,'' said Glenn Reynolds, an analyst with Creditsights.com, an independent research firm.
Down to Wire
Hopkins didn't attend the company's annual meeting in Orlando, Florida, this week to work on securing the credit lines in New York instead. Documentation for the loan didn't get completed until 11.00 p.m. last night, just one hour before the deadline, according to a banker that worked on the financing.
About 30 banks pledged commitments, according to the banker, including Deutsche Bank AG, Bank of America Corp., Bank One Corp. and Barclays Capital. Morgan Stanley Dean Witter & Co., the lead underwriter on Agere's IPO, also agreed to lend, as did Bear Stearns & Co., which is likely to have a co-underwriting slot on the IPO, the banker said.
Credit Suisse First Boston resisted after Lucent turned down its proposal to arrange the financing, according to another banker familiar with the matter. Goldman, Sachs & Co., which advised Lucent on its $21 billion acquisition of Ascend Communications Inc. in 1999, also balked.
All the banks declined to comment.
Pledging Assets
As an incentive, Lucent agreed to pledge its assets as security on the new $4.5 billion lines, and on the existing $2 billion five-year line that was amended. Hopkins said on a conference call a week ago that Lucent would also reward its lenders with future business, including roles on Agere's IPO.
Lucent needs the loans to help fund day-to-day operations after a series of debt-rating cuts effectively shut the company out of the commercial paper, or short-term debt, market.
The company last month said it will shed 16,000 jobs --10,000 within six weeks -- as part of a plan to cut costs and return to profitability. Securing the loans was also part of the turnaround plan, Schacht said.
''Lucent hit a big bump in the road,'' Schacht told bankers on the call last week. The credit lines would help put Lucent ''back into a profitable position.''
Lucent's shares fell 13 cents to $12.40.
My TAKE:
I have another rather simple question???
If Agere is already spoken for what is the value and if the growth in the sector is slowing??? Sounds like some bets are being laid at the tables and the markers are maxed out...Is it 21 or bust??? I figure that at least in the short term that revenues will be boosted at the expense of margins to keep the IPO strong...JMO...Here is my opinion on the AGR.A spinnoff:
Anyone whom owns these shares here IMO is a fool and would do better just buring their money to get the enjoyment of the flickering flames...
The 'spinnoff' IMO was a hoodwink attempt to trick the finacial markets that LU was a viable concern still...
So what do AGR.A shareholders get???
NOTHING BUT DEBT!!!
What kind of game was played here...The way I see it when Morgan Stanley and other lenders gave the cash to LU to prevent a downgrade on the credit in February LU was forced to give a significant portion of the proceeds to the AGR.A IPO to cover the debt...Hey Morgan gets the proceeds of a huge IPO $3.6 billion and they were determined to do the deal because they wanted to lower their exposure to the LU debt (I cannot blame them)...AGR.A gets saddled with $2.5B in LU debt and gets a business that will show no revenue growth and a huge loss!!!
Bottom line the smart money will punish all involved here eventually IMO...AGR.A is still majority owned by LU (58%) and currently LU says that they will be spinning off the rest to LU shareholders in September...I have seen this play out even in good times and it never seems to end well...IMO, just my opinion but I don't think that LU or AGR.A will be around in 18mos...
If the value of AGR.A so good they would have been able to get a private buyer for the company...The stock is just paper and IMO worth par value...
Hey it is just my opinion and I could be wrong...
April 3:
biz.yahoo.com
>>>LUCENT PLEDGES ALL ASSETS
Most investment-grade corporations can still get bank credit without collateral pledges, banking experts say. But companies that are under financial stress or in troubled industries are being pressed to offer credit enhancements.
``Now we're seeing the banks crack down on companies with ratings in the middle to low triple-B range,'' said Reynolds. ``We saw it most dramatically with Lucent, and we're seeing it with others.''
Telecommunications equipment giant Lucent Technologies Inc. (NYSE:LU - news) in February agreed to pledge substantially all of its assets as collateral for $6.5 billion in bank credit facilities, despite its investment-grade ratings.
Struggling to restructure its operations and recover from huge losses, Lucent had little choice, analysts said.
``They absolutely had to have the bank facilities, otherwise it would have been difficult to maintain ongoing operations,'' said Mike Weaver, an analyst who covers the company for Fitch.<<<
The shareholders don't have any equity in the stock so there is no value...IMO this is not good and leaves common holders out in the cold...
New layoffs announced, which although necessary are not good news because there is such a drop in demand...
dailynews.yahoo.com
IMO Book value is nil...
To give an example, say that you buy your house and have no equity (the bank holds it all) because you did not leave a down payment...Say that you are sued, can someone place a lien on your house???
The answer is no because you have no equity in the home...LU's book value has absolutely no bearing because the company has already sold the equity (assets)to its lenders...That leaves no value to common shareholders...since all the assets are part of the secured portion of the loan common shareholders would likely get nothing...The valuation would be low because the assets would be sold in firesale and disstressed fashion...That is why AGR.A was IPOed so low and is worth so little...Thos shareholders have no equity either because LU is in control of the majority of the shares and saddled AGR.A with $2.5B in debt...That is firesale prices but any liquidation would leave common holders holding the bag IMO... |
