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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: Kingpin who wrote (3443)	1/15/1998 3:26:00 PM
From: Tom Markowski	Read Replies (1) \| Respond to of 12468

Doesn't sound too negative to me. Can someone email me a copy of the Grubman report? One Analyst Holds The Line Amid Herd Of WinStar Bulls By Brian Steinberg NEW YORK (Dow Jones)--Is analyst W. Jack Reagan offering a voice of reason or merely a contrarian yelp? The answer depends upon your market view of WinStar Communications Inc. (WCII), the wireless phone-service provider that can transmit phone calls through the microwave spectrum. A recent spate of positive news from the New York company has prompted several analysts to give their stock-price targets a solid boost. A.G. Edwards & Sons Inc. recently upped its year-end 1998 price objective to 53 from 33. Noted Salomon Smith Barney analyst Jack B. Grubman initiated coverage with a 12- to 18-month price target of 71. NationsBanc Montgomery Securities Inc. analyst William D. Vogel has gone so far to predict a 12-month price of 100, up from an earlier target of 60. Meanwhile, Reagan, with Legg Mason Wood Walker, downgraded the stock to outperform from buy Thursday, although he still inched up his 12-month target price to 36 from 32. "I'm swimming against the tide," Reagan noted Thursday in a phone interview. "I'm not down on the company at all, but I had an opportunity to look at some of the other models, and I would just tend to say they reflect a takeout or acquisition premium." To be certain, now that AT&T Corp. (T) has made moves to snatch Teleport Communications Group Inc. (TCGI), the largest of the competitive local exchange carriers, or CLECs, for $11.3 billion, analysts have said WinStar looks much more attractive to larger phone companies seeking entry into the local-service market. WinStar shares have traded heavily in the last few sessions. At midday Thursday, the shares were down 11/16, or 2%, at 33 on Nasdaq volume of 1.8 million, compared with average daily volume of 1.1 million. Earlier, however, the shares matched the 52-week high of 33 3/4 set Wednesday, a day when trading volume was almost four times the daily average. And WinStar has made several interesting announcements recently. On Wednesday, the company prereleased its fourth-quarter line-growth figures ahead of earnings. The number of installed lines rose by 30,000 during the quarter, a 58% increase over third-quarter activity. What is more, WinStar reported a 38% increase in the backlog of lines ordered. The company also has been active on the acquisition front. WinStar will buy Midcom Communications Inc.'s assets, Telesoft Corp.'s (TSFT) GoodNet unit, and the switching assets of US One Communications Corp. As a result, the company now plans to be in 30 markets by the end of the year, rather than 20. The company expects to be in 40 markets in 1999. In a recent research note, NationsBanc analyst Vogel said WinStar's current stock price does not reflect the scarcity or superiority of its assets. In a consolidating industry where MFS Communications has been scooped up by WorldCom Inc. (WCOM) and Teleport by AT&T, WinStar "is the last of three national competitive local phone companies," he wrote. And because WinStar is not a fiber-based operator, the company does not spend as much to reach its customers, Vogel wrote. But, Legg Mason's Reagan said WinStar's future potential "is the $64,000 question. How big can WinStar be?" "I can justify doubling my targets on a takeout price," he added. "My target is stand-alone." The time for WinStar to be acquired is not at hand, he said. Reagan argued that investors ought to see how fast Teligent Inc. (TGNT), a recent wireless start-up that offers similar services, builds its network. Additionally, an upcoming government auction of licenses in the 28-gigahertz microwave spectrum could produce a third national provider of this type of phone service, he said. He said he could see WinStar linking up with a larger carrier via an acquisition or alliance within two to three years, "and that provides significant upside potential, but do I tell you to invest on that right now? I don't have any visibility on that happening." A WinStar spokesman said that even the most bullish price targets were within the realm of possibility and that the company felt it "will be a multibillion-dollar company over a short timeframe." In the nine months ended Sept. 30, the company had revenue of $49.6 million. -Brian Steinberg; 201-938-5218