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Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: idealist1 who wrote (10302)	5/21/2002 8:39:38 AM
From: JSLyons	Respond to of 11568

Nice buy on the lows after the S&P drop. I've been watching but have not taken the plunge for the common. However, I bought some cheap WCOM bonds the other day, before the re-financing news. Only went for the short maturities. I'm looking at the common as well. Bests, Jonathan

To: idealist1 who wrote (10302)	5/21/2002 11:02:04 AM
From: BEEF JERKEY	Respond to of 11568

I bought the S&P dump day as well so I'm happy with my current position. The argument for not buying WCOM, and the reason it dumped last week, is that the bankrupt value would not leave anything left over for equity investors once the Bond holder were through. If the funding for the new loan goes through, and all indication are that it will, then BK isn't in the scenario and is out the window for at least 3 years. So to value WCOM based on the BK value becomes a ludicrous argument. 3 years is a long time in the stock market. Without imminent BK then WCOM has to be looked at from a cash flow - ongoing concern view. Here WCOM is already generating $20 bil + revenues, much more if you include MCI, and it does have "wiggle room". Anyone who has listened the below interview may realize last week "hysteria" took over. Both the below links should be listened to by anyone looking at WCOM. Grover Interview: news.morningstar.com Recent CC: web.servicebureau.net What would really turn perception around regarding WCOM would be upped guidance or an up surprise quarter. This is where I believe many will be surprised. The new neighborhood plan by MCI will add to revenues, it is simply a great plan for a certain segment of the population. Many people will switch to this plan and that will be all new revenues. Another likelihood, totally discounted by the markets, is that at some point the glut in bandwidth will become a shortage and higher prices will result. In the meantime WCOM will be able to address some of the debt concerns by trimming what ever fat they can, eliminating the MCI div, possibly rolling MCI back into WCOM (apparently freeing up $800,000,000.00) and selling what they can. I am not too impressed with WCOM's return on equity lately but that does not mean the assets they hold are worthless. These will be valued at a much higher level once the telecom sector and the bandwidth glut finishes shaking out. This is why the new funding will be viewed positively by the markets and should take the price higher. Buying time allows for this scenario to play out. Once WCOM has time on their side the whole equation surrounding stock evaluation changes. Of course that doesn't mean that there is no risk in WCOM here, eg. even three years may not be enough time to turn things around due to whatever circumstances. Its just the bet that WCOM is going BK becomes just one of many possibilities pushed way out into the future while the stock price here and last week has been pricing in that possibility 90 - 100%. The gravy will really flow if WCOM starts to really turn their business around and BK is totally taken out of the equation.