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Technology Stocks : McLeod, Inc. (MCLD) ---- IPO -- Ignore unavailable to you. Want to Upgrade?

To: DHB who wrote (601)	5/24/2001 9:32:56 AM
From: Doug Bean	Respond to of 1418

Dan: the best part is the Mississippi :-) i never thought that i would not have been on the river at least 6-7 times by June.. this really sucks. i am leaviing on Monday for a county lake in southern iowa for 3 days.. All the albor day people will leave then I can have some peace out there and the bluegills are spawning all over and i love catching them omn a fly rod right now. READ THIS copied from Yahoo: McLeodUSA (Nasdaq: MCLD) $6.19 We've been staying on the sidelines with regard to the telecom sector. Overcapacity has led to falling prices for telecom services, postponing the day when many upstarts can generate positive cash flow. Compounding the sector's woes, many players have massive debt loads that could force them to liquidate. Just this week, Teligent (Nasdaq: TGNT) declared banckruptcy. But as weaker carriers disappear, the outlook should brighten for the remaining stronger players. With more than $1 billion at its disposal ($324 million in cash, $700 million in an untapped credit line, McLeodUSA (Nasdaq: MCLD) looks to be a survivor. McLeod has avoided major metro areas and has instead built an impressive fiber optic network in a number of Tier II and Tier III cities. And the company has built an extensive inter-city network to connect those cities. The efforts have paid off smartly as McLeod has boosted revenues at least 6% sequentially for more than 30 straight quarters. And rising revenues have helped boost the company's cash flow. McLeod's overhead is already in place, which means that S,G&A as a percent of sales continues to decline. In the first quarter of 2000, that figure stood at 42.4%. A year later, S,G&A has dropped 440 basis points to 38.0%. Couple that with a recent decision to scale back CapEx plans in the near term, and McLeod looks poised to grow EBITDA at a heady clip over the next few years. CSFB's Mark Kastan expects Mcleod to generate $150 million in EBITDA this year and $400 million in 2002. Based on a discounted cash flow model (that was recently revised downwards), Kastan thinks the stock is worth $29--more than triple the current price. Mcleod's $3.5 billion debt load is certainly a cause for concern. But Robertson Stephens' Jim Friedland points out that the company should complete its planned network build out with $180 million to spare. Friedland has a much more modest price target of $9, which is still nearly 50% above current levels. McLeod's President Stephen Gray is confident that the company will survive and thrive. He recently plunked down $586,000 of his own money to buy the stock.