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To: Softechie who wrote (1123)	4/18/2001 11:49:22 PM
From: Softechie	Read Replies (1) \| Respond to of 2155

DJ XO Commun Up -3: M. Stanley's Scott Cuts Price Target 18 Apr 15:20 Page, the Moody's analyst, said he expects XO to make an announcement soon about how it will address the funding gap, answering investor questions about funding sources and potential changes to its business model or expenditure plans. Morgan Stanley analyst Todd Scott said in a note Wednesday that he believes XO will be able to attract new funding and can improve its position by cutting some expenses. But he warned that the private equity financing deal it needs to secure will be dilutive to current shareholders. Scott cut his price target on XO's stock to $18 on the assumption that it would raise $2 billion at $2.50 a share, diluting existing shares by 60%. But he also said it was more likely XO would raise $1 billion through a mix of equity and vendor financing. Scott also warned investors of risks associated with a possible scaleback of XO's business plan. "There is significant downside risk to such a pullback being too small or too large," he wrote. A pullback worth $200 million to $300 million would be too small to have a meaningful impact and would imply new capital was unavailable, he said. Scott was also concerned that XO could imperil its core U.S. operations with cutbacks and argued the better route was to pull out of Europe, to save more than $500 million. -By Riva Richmond, Dow Jones Newswires; 201-938-5670; riva.richmond@dowjones.com (END) DOW JONES NEWS 04-18-01 03:20 PM