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

To: Sir Francis Drake who wrote (13162)	8/4/2001 11:03:19 PM
From: trainleaving	Read Replies (2) \| Respond to of 15615

Morgan - You're being challenged over on the Raging Bull board <g>. I'm not an accountant, but I thought I'd post this so that you could provide a rebuttal. The poster is Patches07. << The Morgan post from SI is right on the money. But the cash position isn't as wholesome as he thinks. He said: .."That's where you get to look at what's open to GX. They have some $2 bln. after tax from the ILEC. They also have some $1.7 bln revolving credit - for a total of $3.7 bln. That has to last until their earnings cover at least all of the operating costs and interest payments are covered from proceeds of their business." * * * * The mistake people make when talking about cash is that cash is relative. Cash, itself, is part of current (liquid) assets. Current assets should be weighed against the accounts that make up current (due within one year) liabilities. The only cash that is readily available is the cash represented by the excess of current assets over current liabilities (working capital). Where account receivables play a majr role in the business model, the current assets total should be close to twice the size of current liabilities total to account for collection problems and delays. Anyway, Morgan's view of cash available as being $2 billion is incorrect. Actually, available cash after the ILEC sale and adjustments to the 3/31 balance sheet figures is less than $400 million. $400 million plus the $1.7 billion available on the existing credit line places some limits on the choices available. Relative to new credit agreements: the market price of the stock produces a market capitalization that is about $5 billions short of shareholders equity that is on the books. Since the asset side of the balance sheet holds over $10 billion in goodwill, the stock price indicates that goodwill is too high; it's overstated. This is an elementary asset test for any banker...even some lawyers know how to use a hand calculator, right? ~grin~ I personally think the bonds will crack $70 and head for $50, to provide in excess of 24% returns, compounded and a safety hedge should things get ugly. The preferred stock prices have already cracked below 40% of par. >>