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Technology Stocks : GX Investors Thread -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (34)	8/20/2001 11:33:12 PM
From: KJ. Moy	Read Replies (2) \| Respond to of 586

<<When the current in place network is fully depreciated ($11 Billion worth of depreciation) and still producing revenue will you argue that it has no value at all? >> GX's network is equivalent to someone bought up lots of nice rental properties in the Boston downtown area 10 years ago. You get to depreciate them during tax time and in reality they go up in value everyday. And, the replacement price is only higher over time, not lower. Your excellent point is missed by many investors today.

To: BWAC who wrote (34)	8/21/2001 9:09:08 AM
From: Sweet Ol	Read Replies (1) \| Respond to of 586

It is my understanding that writing down impaired assets is somewhat arbitrary and not that easy to do. Also it is somewhat optional. There is no reason for GX to write down their assets and make their balance sheet look worse until they have to do it. My point was that if you assume the replacement cost (a rough estimate of the fair market value) is 50% of book value, then it is worth roughly the debt owed on it. Now, that is not the same as saying the asset has no value. Clearly it is capable of throwing off a lot of cash. The question I raised is whether or not the cash generating value of the assets is worth $4.5B? In other words, will they generate more net profits than buying $4.5B of bonds? I am uncertain about how to evaluate GX at this time. Disclosure: I paniced and sold my considerable long position when the DoD news came out. I am debating whether or not to buy back now that I know more about the situation. Best to all, JRH

To: BWAC who wrote (34)	8/23/2001 1:20:31 AM
From: Spekulatius	Read Replies (2) \| Respond to of 586

BWAC -here are some late comments: >> Assets are also required to be shown on the books at the lower of Cost or Market Value. << There is no market value for GX's assets. The "market value" of GX would only be know if GX decided to liquidate itself. In the absence of a market value, GX will stick to a predetermined depreciating schedule. Is it obvious how fast GX depreciates its assets? Does anybody know the answer? >> When the current in place network is fully depreciated ($11 Billion worth of depreciation) and still producing revenue will you argue that it has no value at all? << GX network will never be fully depreciates, because GX has to buy new equipment to keep its network up to snuff. How much does it cost to keep GX network state of the art? My estimate is that at least 2B$ of capex is needed to keep it modern - if GX decided not to invest in capex, they would be hopelessly outdated in 2 years, given the technical progress in fiberoptics. Indeed, at this point it is not proven if GX can produce any free cash flow at all (after paying capex and debt)