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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: DWB who wrote (12605)	7/11/2001 12:05:40 PM
From: jopawa	Respond to of 15615

Analyst Actions Goldman Whacks Telecom Sector With Downgrades By Dan Bernstein Staff Reporter 7/11/01 11:08 AM ET URL: thestreet.com (Updated from 10:56 a.m. ET) At least Frank Governali isn't making too many excuses. In a research note this morning, the Goldman Sachs analyst rightfully admitted that the massive onslaught of downgrades and estimate revisions that he and his staff unleashed on the telecom sector this morning would perhaps have been more appropriate 12 or 18 months ago. But, as he put it, "midyear is a good time to consider the outlook for the remainder of the year, as well as the prospects for the new year." The outlook doesn't seem too good. Governali downgraded WorldCom(WCOM:Nasdaq), Network Plus(NPLS:Nasdaq), McLeod USA(MCLD:Nasdaq) and ITC Deltacom(ITCD:Nasdaq) to market outperform, removing the companies from Goldman's recommended list. He also downgraded Equinix(EQIX:Nasdaq), Level 3 Communications(LVLT:Nasdaq), Metromedia Fiber Network(MFNX:Nasdaq) and XO Communications(XOXO:Nasdaq) to market perform from the recommended list, and he dropped Alaska Communications Systems(ALSK:Nasdaq), Allied Riser Communications(ARCC:Nasdaq), Focal Communications(FCOM:Nasdaq), Net2000 Communications(NTKK:Nasdaq) and Williams Communications(WCG:NYSE) to market perform from market outperform. The analyst did leave several names on the recommended list: Global Crossing(GX:NYSE), Qwest(Q:NYSE), AT&T(T:NYSE), SBC Communications(SBC:NYSE), Allegiance Telecom(ALGX:Nasdaq), AT&T Wireless(AWE:NYSE), Nextel(NXTL:Nasdaq), Sprint PCS(PCS:NYSE) and BCE(BCE:NYSE). Earlier this year, Governali downgraded the entire U.S. telecom sector to an underweight rating, believing that the individual companies will underperform the broader indices. He still thinks the stocks will underperform into 2002 because fundamentals haven't improved -- and there's hardly any indication that they will anytime soon. Because the analyst didn't "follow through with specific stock downgrades within the group" when he issued the sector rating earlier this year, he felt it necessary to do so now. Governali decided to go ahead with the individual downgrades because of the "increasing evidence" that long-term growth and short-term earnings targets are becoming "less achievable." Plus, the analyst has a "growing conviction that over the near term positive fundamental events are unlikely to materialize." Finally, the analyst said the sector is struggling with too much competition, intense pricing, restructuring initiatives and regulatory uncertainties. While acknowledging the "untimely" point at which the downgrades came, the analyst said that "to varying degrees, stock prices already reflect this pessimistic assessment, but we believe that the group will continue to underperform until various challenges are worked through." Level 3, Williams Communications and Worldcom all had their earnings estimates and price targets lowered along with the downgrades. Governali also cut his estimates and price target on Global Crossing, even though he didn't change his rating. -------------------------------------------------------------------------------- --------------------------------------------------------------------------------

To: DWB who wrote (12605)	7/11/2001 3:19:57 PM
From: TechMkt	Read Replies (1) \| Respond to of 15615

Incredibly positive note. Especially the parts about stealing share away from the incumbents (T, WCOM, Q,...). Fez ________________________ Deutsche Banc Alex. Brown Inc. 11 July 2001 HIGHLIGHTS: * Yesterday GX/AX was selected by the Department of Defense (DoD) to provide networking capabilities to the Defense Research and Engineering Network (DREN). The three year Commercial Services contract is valued at $137Mn but may reach up to $400Mn over a potential 7-10 year life. * We believe Global Crossing won the RFP over such competitors as FON, T, WCOM and Q. It is our understanding that this contract was previously awarded to AT&T on 7/16/96 and was valued at $430Mn. Contract win highlights a fact which we have reiterated continuously - GX continues to take share away from the Big 3 as they face internal issues. We believe, the DoD has informally indicated that GX, a 3 year old company, is as good, or in this case better, than the Big 3 or any other emerging player, based on their rigorous standards. * It is our opinion that possibly the most technologically advanced and demanding client, the DoD, has now validated the GX strategy. Additionally, we believe the DoD has been convinced of GX's long term viability by performing its own financial analysis (eliminating bankruptcy/liquidity concerns) to support an expensive transition to a new network which will undoubtedly carry highly sensitive information critical to national security. Recall from our Backstage Pass conference, that switching carriers by displacing the incumbent (AT&T) is a costly undertaking which rarely occurs, thus this win is highly significant for GX. * We believe GX won the contract due to their ability to provide security and reliability over a technically advanced network - thus a superior solution to that of T or any other competitors. Recall, the DoD's networking group is actually the purveyor of ARPANET (Advanced Research Project Agency Network), the early version of todays Internet and is highly adept at understanding networking technology. * GX will provide ATM, IP and wavelength services over a VPN initially in the US. DREN is a highly secure network linking 6,000 scientists across 4 major resource centers and over 100 distributed government, commercial and university sites, allowing research collaboration. DREN currently consists of DS3 to OC48 capacity, which we believe will eventually expand internationally through the GX/AX global network. (Further info on DREN: www.hpcmo.hpc.mil/index.html) * We are reiterating our Strong Buy rating on the shares of GX with a 12 month target of $30 based on our 10 year DCF. We believe this contract with the DoD validates the company's strategy and should easily counter irrational reports of liquidity/ bankruptcy concerns at GX, in our opinion. We expect GX to report 2Q01 earnings on 8/1/01.