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Technology Stocks : CellularVision (CVUS): 2-way LMDS wireless cable. -- Ignore unavailable to you. Want to Upgrade?

To: FBarron who wrote (1355)	2/28/1998 8:15:00 PM
From: Bernard Levy	Read Replies (1) \| Respond to of 2063

Floyd: I essentially agree with you. CVUS is currently valued at its book value (license value based on current LMDS auction bids plus equipment value plus value of its existing customers). What has everybody spooked is that CVUS has no cash on hand and needs the Fleet loan quite badly. Furthermore, like all broadband wireless companies, LMDS companies can be expected to have large negative earnings (see for example WCII or TGNT) while they build out their system and recruit customers. Investors can easily accept such negative earnings (based on large future earnings once the system has been deployed) as long as they trust the company's long-term market strategy. CVUS has been slow in adopting a long term strategy centered around data services for businesses and individuals. Furthermore, it did burn a lot of money waiting for the auction to take place and for more advanced LMDS equipment to become available (it went from one-way analog FM to one way digital modulation, but it still has not yet deployed a two-way digital service, which will be needed for recruiting business customers). Also, I believe that the NY license alone is not enough to fully take advantage of LMDS potentialities. It will need to become part of a larger Northeast based LMDS operation. All this uncertainty explains why CVUS is essentially trading at book value (license included). It also looks like shorts have piled up on this stock. The short interest went up to 200K shares as of 2/13/97. I also believe that a large percentage of the 2/17 volume was short sales, so that the current short interest must be quite high. If CVUS gets its Fleet loan approved, or if the auction heats up next week, the shorts may need to make a hasty retreat. However, for the time being it is the longs who are suffering. Once the uncertainty dissipates, and when the intentions of LMDS players become clearer after the auction, CVUS will probably be more realistically valued. Comparing it to TGNT or ATHM is mind-boggling, given that these two companies are also in their infancy, but have monstruous market valuations (WCII is different, because it is right in the middle of its ramp-up phase and has been very successful in developing its customer base).