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Technology Stocks : Qwest Communications (Q) (formerly QWST) -- Ignore unavailable to you. Want to Upgrade?

To: Tim Bagwell who wrote (311)	11/10/1997 8:50:00 PM
From: John B. Ray	Respond to of 6846

Tim I appreciate your non-aggressive level headed presentation of the cons. The balance makes this thread that much more valuable to all involved. I've been keeping an eye on Qwest since before the IPO and since I missed the first ride up am looking for a good entry point. There will always be plenty of opportunitly for the cheerleaders to continue their sincere rally cries. Any stock has it's negatives and risk even if just temporary. Thanks for your thought provoking comments.

To: Tim Bagwell who wrote (311)	11/10/1997 9:26:00 PM
From: Andrew G.	Respond to of 6846

Tim: I agree that there is a perception that the stock is overvalued. Of course it doesn't help to have erroneous info out there like Yahoo! chart& quote showing EPS of .04 and PE of 1278.13 ? From their 10/28 earnings report: "Net income for the third quarter of 1997 was $12.7 million ($0.12 per share) compared to net income of $3.5 million ($0.04 per share) for the same quarter of 1996." If you look at last quarter earnings of $188.9M and extrapolated that over 4 quarters you get $755.6M. Now that is just with 2800 miles of their planned 14400 miles activated! Let's extrapolate further and assume that they don't increase margins or earnings per mile: 2800/14400 = 19.44% activated network miles. At 100% activated network miles the earnings/yr would be:$3.886B ! But then consider, earnings for carrier services increased at a rate of 53% and commercial services at a rate of 79%. Also note that they said "Qwest will continue to emphasize higher margin, higher quality dedicated line services." I'm sorry but I must sound like a damn cheerleader for Qwest but once their roughly $2B is spent to lay down the fiber, the earnings is pure gravey. You've got maintenance costs (which can't be much -the cable is burried and made to last) and you've got other potential expansion costs and other typical business expenses. Do you really think that investors are going to sit and watch this baby tread water for a year or so and then all of sudden go through the roof! I don't. With each quarterly earnings report, I expect increasingly higher revenues for more activated network and services. This is a profitable company with ~20% of the network activated as of 10/28. What more can you ask for? "Qwest's planned domestic network will connect 125 cities, which represent approximately 80 percent of the data and voice traffic originating in the United States, upon its completion in the second quarter of 1999. Qwest is also extending its network 1,400 miles into Mexico with completion slated for late third quarter 1998."