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Technology Stocks : Covad Communications - COVD -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (4079)	5/1/2001 11:18:44 AM
From: CChalmers	Read Replies (1) \| Respond to of 10485

The bondholder letter probably serves a straightforward, rational objective. Many buyers of convertible bond immediately sell short relying on their conversion rights. If such a company then goes bankrupt the bondholders may do ok in the liquidation or restructure (in Covad's case they end up owning the network or receiving the proceeds of someone buying it) but more important they never have to buy in the short sale. BIG Profit! So what these bondholders want is for Covad to stop spending money to add new subscribers, which is what the money is spent for now. That would seal Covad's doom in its present form - meaning present equity holders are wiped out. Some comments on this board and others sound like people think its a well meaning if conservative idea to prolong the company's life. The bigger Covad gets in revenue, subscribers and earnings the less likely it will fail. The earnings part of that equation required Covad to stop building additional network and focus on filling up utilization of the network already built.