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Strategies & Market Trends : Lizard King's Trading Swamp -- Ignore unavailable to you. Want to Upgrade?

To: Paul A who wrote (2377)	10/23/1997 9:39:00 PM
From: gtc123	Read Replies (1) \| Respond to of 7396

Cellularvision USA (CVUS). Provides superwireless high speed internet, video, and telephony through Local Multi-Point Distribution Service (LMDS) in New York. They are the only company in the U.S. with an LMDS license giving them about 1GHz of bandwidth in the 28Ghz and 32GHz range. They are nearly completely built-out in NY, and thus have the opportunity to offer this superior service to the 8.6MM potential subscribers there. They were given this license for free by the FCC for their pioneering role in implementing the technology HERE'S THE STORY: On December 10, 1997, the FCC will be auctioning off over 450 more LMDS licenses to the highest bidders. Analysts have suggested that NY and San Fran are the most valuable licenses, but CVUS already owns the NY license, so it's not up for sale. CVUS gest to maintain rights to that license for free. Additionally, because CVUS has a "pioneer-preference", they get 15% off any additional licenses they want to bid for. The potential lies in the fact that the auction will be a default mechanism for valuing CVUS' current license. Analysts have suggested that in top cities, the license will go for $30-$40 per potential subscriber. That makes CVUS' current license worth around $300MM. What is CVUS' current market cap? $120MM+. This auction has been postponed in the past, but because chairman Reed Hundt is leaving, he has finally committed to this date. Last time there was just tentative talk of an auction approaching, CVUS traded at $16/share. Currently, it trades at $9/share. Many analysts suggest that the value of the license itself is $18/share. That does not include the incremental revenue streams that the license represents. With the revenue streams, the company, with the NY license alone, could be worth over $20. With the auction approaching, I expect more press, more analyst coverage, and everything has been pointing to a very fruitful auction. This is a tremendous time to get in. I think there is definitely potential for 50% appreciation in a month, but personally, I would expect the price of the stock to be at least $15 around auction time. There's another thread on SI about this stock. It's covered by Dillon Read and Lazard Freres. Best of luck!