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

To: DWB who wrote (530)	2/8/2002 10:55:56 PM
From: Maurice Winn	Respond to of 586

nytimes.com <NEW YORK (Reuters) - Telecommunications company Global Crossing Ltd. (news/quote) (GBLXQ.PK) on Friday found itself the focus of two federal investigations, by the FBI and securities regulators, as the fallout from its huge bankruptcy filing last month intensified. In a double blow to the high-speed telecommunications network operator, federal law enforcement officials said the Federal Bureau of Investigations had launched a probe into the company, including its accounting practices. Global Crossing said the U.S. Securities and Exchange Commission also had launched a formal Global Crossing investigation, after a letter from a former Global employee alleged that the firm had used improper accounting methods that artificially inflated revenues. Global Crossing said it would not comment on the probe by the FBI, but a spokeswoman said the company had received notice of the SEC investigation in a letter dated Feb. 6.... contd... > DWB, it was a BIG Tonka truckful. I guess you saw that it was the Senior Notes I bought, NOT the stock. I will find out soon if it was MAD money. [Mutual Assured Destruction]. Questions and thoughts here from me [in the other stream]http://www.siliconinvestor.com/readmsg.aspx?msgid=17038352 Maybe this is the better discussion in SI? Mqurice ================================================================ PS: For ease of reference, here's my post in the other SI stream: To:Dragonfly who wrote (15350) From: Maurice Winn Friday, Feb 8, 2002 10:40 PM Respond to of 15434 Hello again Dragonfly! I am now the proud owner [not actually proud yet since I'm in the early stages of learning what the heck is going on here - I did something I haven't done for decades, which is take a position on the strength of a very superficial fundamental analysis and technical analysis. Technical analysis meaning what the heck the share and debt price graphs are doing. <Global Crossing's (GX) Chapter 11 petition Monday listed assets of $22.44 billion and debts of $12.39 billion, Effing unbelievable! That says the company is worth $10Billion. Where's my $4 a share then! They're just writing off their investors... the banks and everyone on the inside seems to have a hand in this deal.> Senior notes with no interest payable [by me] available for 4.25c each a few days ago, [I don't know what the price is now]. There are a lot of assets and I like the idea of fibre wrapped around the world to 200 major cities. It's complete and working, with many customers and burgeoning demand, huge price elasticity [millions of people would gobble lots of petabytes if they were cheaper]. A trivial amount of data is used in SWIFT money transfers. Even if they are high-priced transfers, the total revenue is low - better to give the SWIFT people a huge consumer surplus and bring in the PacketVideo type data for hordes of people. With the debts taken down to 4c in the dollar, that leaves vast assets for the creditors to take possession of. Now, if we halve the value of the fibre [because it's getting old and it's probably half the price to duplicate the network now], that still leaves a lot on the table. Halve it again for more depreciation and it's still more than good. <How are we supposed to believe a company with $2.4B in CASH is only worth $750M? > Because the creditors can't get their money back from that $2.4bn and they might not find a buyer for the network. Oh, hang on, yes, they have. $750 million from Hutchison and the Singapore government's company [I should learn its name] in exchange for 79% of the restructured company. So the creditors are dog tucker and the shareholders are even worse off than the creditors. If there's no other bidder, I guess that's a good deal. I can't bid more. But MSFT could! QUALCOMM could. They both have to have big demand for data to make their businesses hum, and QUALCOMM is interested in strategic investments to generate CDMA sales. A fat pipeline around the world with cheap megabytes is essential to CDMA development and megaflops in Windows XP operating systems. <From my perspective the covenants (And deliberatly not making sales) are an excuse to force a BK removal of the stock ownership, and redistribute ownership among the creditors and insiders.> I think a very jaundiced view of management and associated parties is sensible. There is a carve-up in the offing. I commented half a year ago [or more] that I didn't think much of their marketing ideas; it was the same 'high-priced' idea that Globalstar had, with the same obvious consequences. They had a huge capital sunk cost with low marginal costs for moving another gigabyte. They should have stacked it high and sold it cheap. But that's anathema to the conventional wisdom in marketing schools where it is totally uncool to sell on price. They want frequent megabyte points or some other stupid, annoying idea which wastes everyone's time. They want to separate premium, corporate, high-margin customers from the uncool J6P porn viewer who pays very little. Well, it didn't work! Same as it didn't work for Globalstar or Iridium. Too bad if the premium people get a bargain if they can't be separated out to be charged more - it helps create a maximum consumer surplus, which is what drives rapid market development. <I'm in a position to provision long haul capacity, and I can assure you that no company I own or have management in will ever do business with Global Crossing.> How about never doing business with any of the management or companies which have been involved until now? There's no need to punish new owners and the assets are just inanimate objects. What if I offer it to you so cheaply that you think it is a good idea? Hutchison appears set to get one of the 7 Bargains of the World. "Never has so much been transferred to so few for so little". [Winston Churchill in WWII] So, what are the options apart from Hutchison? What are the Senior Notes really worth? At 4c in the dollar, Hutchison/Singapore are getting 4 times the stock for the same price as the creditors. AND they get the profits of control too. Not to mention sweetheart deals for their own businesses I suppose. Have I figured it out correctly so far? Thanks for any ideas/information etc people have. Mqurice

To: DWB who wrote (530)	2/13/2002 3:37:35 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 586

<Global Crossing became the largest telecom in U.S. history to seek bankruptcy-court protection when it filed on Jan. 28. As part of a reorganization plan announced the same day, the company agreed to sell 79% of its shares to two Asian outfits, Hutchinson Whampoa and Singapore Technologies Telemedia, for $750 million in cash. Under the plan, the banks, bondholders, and trade creditors that are owed nearly $8 billion would get $300 million in cash, $800 million in new debt, and the remaining 21% of the company. Global Crossing's current shareholders would get nothing.> Message 17051097 Well, DWB, that's better than a poke in the eye with a burnt stick [for creditors]. In fact, it seems like a reasonable deal, [given the current market price of the debt], but I thought there was a lot more than $8 billion in debt. According to this link, nytimes.com there is $12.4 billion in debt <... Hamilton, Bermuda-based Global Crossing filed for protection under Chapter 11 of the bankruptcy code on Jan. 28 in the fourth-largest corporate insolvency in U.S. history. It listed assets of $22.4 billion and $12.4 billion in debts....> I wonder which report is true. I thought the debt is more like $15 billion. While shareholders are understandably angry, if there isn't a better offer for the assets, then that's all they are worth. If the creditors aren't paid out, then I don't see why the shareholders should get anything at all. That's how debt works and everyone [who is investing and taking on debt via their companies] should know that. Mqurice