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Strategies & Market Trends : Groundhog Day -- Ignore unavailable to you. Want to Upgrade?

To: Logain Ablar who wrote (2127)	4/24/2002 11:20:32 PM
From: John Pitera	Respond to of 6346

Tim, WCOM dramatically lowered their EBITDA guidance at the end of last week. Even Jack Grubman and SSB lowered WCOM from a 1 to a 3 on Monday, due to concerns that the rating agencies will be lowering the debt ratings and increasing WCOM debt servicing costs. This dramatic change in EBITDA guidance obviously flows through to EPS, which we are lowering from $0.68 to $0.39 per share. We are bringing our official estimates for revenues and EBITDA down to the low-end of the range to be conservative. Thus, we are looking for $20.8 billion in revenues down from $21.7 billion and $7 billion in EBITDA down from $8.3 billion for 2002. We are lowering our price target to $5 per share down from $10 per share. The change is due to the cut in EBITDA and our view that WCOM should trade at a FV/EBITDA multiple of 5.5x, which is consistent with the large cap telecom companies all of which are seeing declines in 2002 profitability due to economic weakness and the telecom malaise. In addition, $5 per share is equal to tangible book value.