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To: E.J. Neitz Jr who wrote (31101)	4/27/2001 9:29:35 AM
From: E.J. Neitz Jr	Respond to of 53068

XOXO W.S.J Article on Future and Investment Prospects: April 26, 2001 -------------------------------------------------------------------------------- XO Commun Stk Price Has Room To Grow, Analysts Say By CHRISTINE NUZUM Of DOW JONES NEWSWIRES NEW YORK -- With reduced expansion plans and financial targets, XO Communications Inc. (XOXO) still has room for share price gains, but the bar has been lowered, analysts agreed. Some debate surrounded just how much potential upside remains for the stock, but by extending the lifetime of its existing cash, the start-up telecommunications company also lowered the risk for investors in its common stock, analysts said. Cutting its capital budget by $2 billion over the next five years, XO announced plans to halt expansion in Europe, postpone activating its long-distance network in the U.S. and reduce expansion into local markets. XO said revenue for 2001 will be about $1.3 billion, down from earlier forecasts of $1.4 billion to $1.5 billion, and said revenue next year will be $2 billion. For the first quarter, XO reported a loss of $1.31 a share, beating the consensus estimate, on revenue of $277.3 million, which was in line with guidance. The company also announced that buyout firm Forstmann Little & Co. agreed to buy 50 million shares for $250 million. While cutting the amount of money XO needs before its operations can fund itself, the deal also mitigated the risk in Forstmann's $1.25 billion preferred stake by cutting the conversion price nearly in half to $17 a share. Most analysts saw the spending cuts and the investment by Forstmann as new reasons to be bullish. "At $5 a share, there is still significant upside for current shareholders," said Ken Kotylo of William Blair & Co., who has a hold rating on the stock. "My discount says the company is still worth the $15 kind of range." During a conference call Thursday morning, XO said its new business plan extends the life of its cash and available credit by a year into mid-2003. Analyst Glenn Waldorf noted that while the trimmed business plan allows the company to avoid bankruptcy in 2002, it also reduces potential profits significantly. Earlier this week, Waldorf said that under a reduced business plan, he would cut his price target to $7 a share from $9. -By Christine Nuzum, Dow Jones Newswires; 201-938-5172