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Technology Stocks : PSIX up 26.5%, Takeover(?) -- Ignore unavailable to you. Want to Upgrade?

To: David N. Kunkel who wrote (2103)	3/3/1998 6:04:00 PM
From: amoezzi	Read Replies (1) \| Respond to of 5650

Sir, For the sake of argument we assume what you are claiming is 100% correct. Then would you explain "Why the stock price is so low". May I suggest a reason: PSIX management has lost its credibility. Please work on restoring what you have lost!! Regards, Abdol A. Moezzi PSIX shareholder

To: David N. Kunkel who wrote (2103)	3/4/1998 12:34:00 AM
From: Randy Tidd	Read Replies (2) \| Respond to of 5650

> I like your objectivity, though some of your judgments may deserve > a little questioning. I'm the first one to agree! > For example, we have continued to grow significantly. We are > getting a good share of the market, based on both customer > numbers and revenue growth (including the per-customer > revenue number improvement, showing we're getting the top of > the market). The market share and number of customers has increased, but so have costs. It's easy to expand a business where cost increases parallel revenue increases! Pardon me if I sound overly negative! But hopefully you see my point. For quite some time now PSIX has been reporting increased gross revenues and number of customers, but we are still well into the red. They are burning their cash reserves, a finite resource, while making claims of expanding their presence and market share. At some point they're going to have to turn this around into a regular business with profits. I am patient investor but I've also seen PSIX miss their projections many times and get bypassed by other companies in the same business that have achieved profitability sooner than they. > It took AT&T years (30?) to become profitable, because they were > building and cobbling together a continental network. PSINet is > building a global network. Well PSIX doesn't have that luxury, considering their current cash on hand and burn rate they are only going to last for a few more quarters before they have to either get financing or dilute the stock, neither of which is savory for investors. I am a long-term value investor but if I'm considering waiting for 30 years before seeing return on my investment, I should look elsewhere. > Also, you should see if you can find a similar > business that is doing as well as PSINet. I would challenge you to > find out the similar metrics on UUNet, Netcom, Bell Atlantic, > AT&T, BBN, or anyone else with whom we regularly compete. When looking at PSIX, the company I keep coming back to is UUNET. They are in the same market niche as PSIX (corporate ISP service) and a couple of years ago achieved profitability after many quarters of streamlining their business, cutting costs, and increasing revenues. Yes, they only reported $0.01 EPS, but they were immediately acquired by MFST (which was later acquired by WCOM) and now they are part of a major play in the next stage of the ISP market which is combining ISP, local phone, and LD phone services in the same package (a WCOM sales rep was in my office just yesterday in fact). While this was all going on, PSIX was losing money, burning cash like it was going out of style, and talking about hoping to achieve profitability in 2-4 quarters, and 4 quarters later, they're still hoping to be profitable in 2-4 quarters. This whole experience has been very discouraging. I admit that I am being a bit of a devil's advocate here, but I have been following PSIX for a little more than 2 years now and have heard the "don't worry we'll be profitable in about 6 months" story over and over again. I'm afraid that we're getting to the point where even the best-case scenario for PSIX's business taking off may be eclipsed by the success other companies are already experiencing. In terms of stock value, PSIX's stock has dropped by about 50% in 2 years whereas the market average and technology sector in particular have seen 30-60% growth per year. They have a lot of catching up to do. I am still holding my PSIX stock for the long term and do, in fact, still have faith in the company and its management team will provide value to the shareholders before we are old and gray. But I'm tired of hearing blue-sky stories and think that it's time that PSIX got down to brass tacks and started focusing on the fundamentals of business -- making money -- rather than making grandiose claims about how bright the future might be. Randy