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

To: Elroy who wrote (14097)	10/1/2001 8:41:40 AM
From: Paul Lee	Read Replies (1) \| Respond to of 15615

from John dessaurer Global Crossing (NYSE: GX, $1.80) owns about 19% of Exodus, a major Web hosting business. Exodus filed for chapter 11 bankruptcy, but is NOT going out of business. Exodus has received $200 million in new financing from GE and expects to be able, in bankruptcy, to slim down, become cash flow positive and carry on. That is good new for Global Crossing, because Exodus is a customer of Global Crossing. Yes, Global Crossing will have to write down the value of its shares in Exodus, but this will not have a material impact on Global Crossing’s operations or balance sheet. That means “less than 1%,” according to an analyst friend of mine, who called Global Crossing. So why did Global Crossing’s stock plunge again? Investors are afraid that Global Crossing will also file a voluntary bankruptcy petition and try to wipe out the shareholders. That fear is based on ignorance. Shareholders are not wiped out in bankruptcy. They keep their shares and their equity ownership. Whether that is worth anything or not depends entirely on the underlying business. The other issue is the creditors. Usually in these cases, bankruptcy or not, a deal is struck and the creditors exchange some debt for equity in the company. The existing stockholders are diluted but still in the game. How much dilution there can be depends on the vigor of the business and the amount of outstanding debt. In the case of Exodus, there is likely to be a lot of dilution. But Exodus can come out of bankruptcy and carry on. Those shares could come back a bit. In fact that looks quite likely in the Exodus case. There is even a rumor that Cable & Wireless (NYSE: CWP, $12.90) might buy Exodus. Global Crossing is still doing relatively well in a bad environment. The company has plenty of cash and is still on track to become cash flow positive by 2003. Deutsche Banc Alex Brown came out again today, saying that Global Crossing is a Strong Buy and re- iterated their 12-month target of $20. Remember, China will spend heavily on telecommunications in the run up to the Olympics. That spending has already started. China will soon be admitted to the World Trade Organization (WTO) and that will mean more demand for telecommunications networks. And in the wake of the attacks, video teleconferencing is becoming popular. Global Crossing is a BUY.

To: Elroy who wrote (14097)	10/1/2001 10:31:52 AM
From: JimieA	Read Replies (1) \| Respond to of 15615

I would guess Exodus investment is included in Other Assets. Remember, GX is marking down it's Exodus investment every quarter through direct charges to GX's equity section. Per 10-Q: "On January 10, 2001, the Company completed the sale of its complex web hosting services business, GlobalCenter, Inc., to Exodus Communications ("Exodus") for 108.2 million Exodus common shares. A gain of $82, net of tax of $44, was recorded upon the sale and has been reflected in the accompanying condensed consolidated financial statements. The value of the shares was $1,918 at the date of closing and $223 at June 30, 2001."