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.

Strategies & Market Trends : Bosco & Crossy's stock picks,talk area -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (3222)	1/2/2003 4:14:34 PM
From: Crossy	Respond to of 37387

Merryfield, there's a long-running thread on IPSU - Imperial sugar that new shareholders including myself "reactivated" recently. Kudos to Paul Lee who started the original forum.. Subject 18795 all the best CROSSY

To: ms.smartest.person who wrote (3222)	1/12/2003 5:53:18 AM
From: Crossy	Read Replies (1) \| Respond to of 37387

re: MPOW.OB - some thoughts and a futue scenario A poster (Explorer30) on Ragingbull came up with an interesting candidate for Mpower for a business combination: Telepacific (www.telepacific.com). Same footprint as Mpower after the latter sold noncore CLEC assets and raised CAsh (CA and Las Vegas). Another, 2nd stage combination partner but this time on the Eastcoast is Broadvbiew (www.broadview.net). All 3 companies have a similar facilities based business strategy (not UNE-P but UNE-L and owned switches + DSL concentrators) I took the time to look closer at Telepacific and I now think that he is right and I now think they will combine with Mpower. The only thing I still need to figure out is how it will be done. Since Telepacific is venture backed and older than 2 years they must be fully audited. That would be the prerequisite #1 for a business combination. Then they have funding up to $125m and were very frugal in spending. A little bit smaller than Mpower, fewer access lines (200.000 at max) but higer ARPU, even more high margin Data & T1 products. Venture backers are Rader Renfrank LLC, Investcorp and GE Capital (again). They are aiming for $100-120m annual revenue by 2003-2004. They have only 350 employees. Their website specifically outlines their local penetration strategy as a method of capital-efficient expansion. The 300-400 emp number almost looks like a possible target for Mpower to me (after selling 50% of their local presences and another 40% reduction in staffing of the remainder).. in fact (15000.50,6) is very close to this number. The fact that MPOW and Telepacific are EXACTLY equal in size AND scope makes a doubling up MOST LIKELY. Their technical operations are very similar to Mpower and Broadview. UNE-L plus facilities (Switching voice and DSL access concentrators owned). Technically they are even more proficient than Mpower: right now evaluating VDSL and probably also EtherLoop (EFM - look at Paradyne and Nortel) Only question open is how will the combination be done ?? It doesn't make sense for EITHER company to pay cash. Better spend cash on acquisition of distressed assets. So I guess the Venture Firms will gladly take up new convertible preferred in a business combination. After combination with Telepacific the combined entity then merges with Broadview. The combination would not only be cashflow positive, it would be profitable and has nice NOLs to offset future profits against. Rule of thumb for me is: spend cash for distressed assets, issue shares for equal size & valued business. Telepacific bought some distressed assets of ATG. I Don't think that MPOW gets acquired by Telepacific either. The listing on the OTC (maybe Nasdaq later) can be used to tap the capital markets if telecom gets en vogue again. But since Telepacific is venture backed, those types like interest payment bearing securities better. So I guess a convertible preferred will be done plus warrants, both carrying a conversion price of Book Value plus x% for the venture firms. Same deal then repeated for Broadview. In this way all will be happy: Mpower shareholders, venture backers of Telepacific and Broadview. After the transactions the combined entity of Mpower+Telepacific+Broadview will have around 700.000 access lines in highly concentrated footprint on the West- and Eastcoast (means efficient - little SG&A - high gross margins) Who brings what to the table ? MPOW : brings an exchange listing, streamlined operation, at least EBITDA positive and a cash reserve > $50m Telepacific : brings venture backing (Investcorp), Ge Capital, technical excellence (even better than MPOW) and even higher gross margins (>60% I guess) Broadview : brings an automated provisioning platform with ILECs that should help the combined entity to take a squeeze on provisioning cycle times plus similar technical excellence as MPOW The combined entity should have gross margins in the high 50ies and annual revenues of around $450-500million. After that, missing pieces would be CLEC assets in the South, Midwest and North and a wholly owned national backbone. Good idea would be to save the cash for such acquisitions. I'm sure there are distressed assets left to be gobbled up by a resource rich CLEC out of BK court - pac-man wise.. rgrds CROSSY

To: ms.smartest.person who wrote (3222)	1/14/2003 5:54:42 PM
From: Crossy	Read Replies (1) \| Respond to of 37387

re: NasdaqNM: SMAN .. $4.15 Finally - Breakout on increasing value. This will take us to the next level of resistance, a congestion area between $4.50 and $5.00 best rgrds CROSSY

To: ms.smartest.person who wrote (3222)	1/14/2003 7:39:08 PM
From: Crossy	Read Replies (1) \| Respond to of 37387

re: IPSU news - BOOK VALUE at $16,80 per share now it's now official. CEO Peiser, who is doing an EXCELLENT JOB in providing timely financial updates, has just issued an 8k on the IMPACT of the DCB sale on the most recent financial report: sec.gov. I'm really impressed and the best is, that the impact of the asset sale of the Montana & Wyoming refineries not yet included. I believe that this figure is before any applicable tax items, though. However with the Wyoming refinery sale (Asset was very low marked in the books) my most optimistic $15 book value per share condition will hold easily !! Further tidbits are also contained also in the report: the gross margin percentage would only be reduced by 100bp because of the sale of DCB.. This IS significant IMHO.. And I believe it'S great news.. As I see it, aganinst the numbers posted, a move for application at a REAL STOCK EXCHANGE (preferably the NYSE but the NasdaqNM would do also) is imminent any day. But almost more importantly, the company looks at being on its way to start paying dividends by 2004/2005. !!! No one, even with only parts of one's brain left would sell this stock in the SINGLE DIGITS .. !!! rgrds CROSSY