Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Home on the range where the buffalo roam -- Ignore unavailable to you. Want to Upgrade?

To: Venkie who wrote (9667)	11/5/2002 1:12:58 PM
From: D.B. Cooper	Read Replies (1) \| Respond to of 13815

Venkie I don't know if you own charter comm or not I got this off of briefing.com in case 10:52AM Charter Communications (CHTR) 1.27 (-0.18) (-12.41%) Charter Communications earnings release this morning is reminisent of the bubble era - they publish all the good information - and conveniently overlook the important information. Charter Communications is on Briefing.com's Debt Watch - See today's Stock Brief - this is the bottom of the market. The most important thing about Charter is whether they can make their interest payments long term. Forget stuff like new digital subscribers signed up (226,000 - about 75,000 a month) - forget "homes passed numbers" (does that remind you of @Home, or what?) - forget everything except interest payments and debt levels and capital expenditures. As we point out in our Stock Brief, stocks on the Debt Watch list generally suffer extreme fates eventually. It is the intensive care ward of the stock market. So what about Charter's debt? At more than $17 billion, the total debt is swamping this company. Charter's press release highlights operating cash flow of $496 million, but who cares? After you take out capital expenditures of $584 million and then cash interest payments of $161 million you get negative cash flow of ($267) million. This is an improvement from last quarters negative ($553) million, but it is still in the wrong direction. For more than 2 years Charter has been averaging between $500 and $600 million per quarter in borrowing to finance its cash flow. You can't do this forever. The question is how long can Charter do it? We predict less than six months more - a debt restructuring is virtually inevitable - because they will never grow their way out of this debt hole. The conference call predicted positive cash flow by late 2003 - but frankly, we would like to see that spreadsheet - because the "back of the envelope" type calculations certainly don't do it. Sometimes the simpliest analysis is the best. To reach positive cash flow they would need to close the gap between capital expenditures and interest payments by about $300 million. They won't get it by increasing operating profits - the best projection that was made was 8% over prior year results - that gets them to only about $505 million - only $9 million over this quarter. That leaves $291 million to come from either lower capital expenditures or lower interest payments. Interest never declines - so can capital expenditures be reduced by $291 million per quarter? That would cut them by more than 50% - a trend not shown by any cable company - and certainly not shown by Charter. In the last five days or so, Charter Communications stock has been rising - probably on the theory that it was oversold - or on the idea that Paul Allen would buy everyone out. Both theories are poor now. If Paul really wants this company, he should wait until it files for bankruptcy - and then buy it back. Charter Communications is almost certainly headed for debt restructuring - it is just that no one wants to say it because Paul Allen is a revered icon of American capitalism. Not the way the "wired world" was originally going to be built, but there it is. - Robert V. Green biz.yahoo.com good Luck