To: DubM who wrote (2657 ) 10/30/1997 9:16:00 AM From: 4-UR-Eyes-Only Read Replies (1) | Respond to
To ALL:WinStar Communications, Inc. (NASDAQ - WCII ) BUY $32 target price. Therefore, we are raising our rating from Outperform to Buy. Our primary reasons for recommending purchase of the stock are:Unparalleled broadband wireless spectrum holdings. WinStar has amassed the largest collection of broadband wireless spectrum in the nation. The company's 38 GHz licenses cover all top 50 markets and approximately 180 million people (POPs). Significant economic advantages over fiber optics. Broadband wireless technology delivers fiber optic quality telecommunications services without having to obtain rights-of-way, dig up streets, and lay cable. The advantages relative to fiber are (a) more rapid deployment, (b) lower installation and maintenance costs, and (c) more demand-driven capital requirements. We believe broadband wireless is the optimal access technology for the $57 billion small to medium-size business market. Experienced and highly incented management team. WinStar's senior management team averages 20 years of telecommunications experience, and more than 200 employees have been hired from local and long distance telephone companies to execute the business plan. Additionally, insiders own approximately 18.5% of the company, closely aligning management's and shareholders' interests.Capital Funding. Earlier this year, WinStar completed $400 million of financings and established a $150 million credit facility. Additionally, vendor financing on the broadband wireless equipment is readily available. We believe the company has access to the capital necessary to execute its business plan. Momentum. After launching switched services in New York less than one year ago, WinStar has quickly and methodically replicated its business model in other major markets. The company is on track to offer switched services in 10 markets by the end of the year and will be operating in all top 30 markets during 1999. We forecast that revenues will surge from our 1997 estimate of $81 million to $396 million in 1999.In our opinion, the visibility of the company and its prospects will increase rapidly over the next two quarters. The government's proposed broadband wireless auctions and the recently announced Teligent IPO will heighten investor interest in broadband wireless services. Additionally, we anticipate that WinStar will post declining cash flow losses beginning in 1998, which should bolster investor confidence. Jack Reagan
