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Strategies & Market Trends : BFT: Will the tulip craze ever break down? -- Ignore unavailable to you. Want to Upgrade?

To: CatLady who wrote (293)	4/7/1998 10:12:00 PM
From: Pancho Villa	Read Replies (2) \| Respond to of 650

>because, as has been pointed out before, barriers to entry are almost non-existant, far too much competition. < turn on your tv and calculate the ratio of home excersice equipment adds to BFT ads. What do you get (infinity. This guys really hit the airwaves hard. IMO that is one of the greates forms of competition. Also there are several million screwed customers (you are one of them) that spread the word about how difficult it is to cancelll the contract, poor service is not one of the reasons. A lot of the people also seem to remember dilapidated dirty gyms. >I am unclear on how much the refinancing will reduce their interest expenses, but if I guestimate that interest expenses are cut in half,< No, you are wrong. did you read my post on this? Interest expense will be in the order of 40 million vs 43-45 million last year. However, the refinancing took an under the rug 20+ million charge than sensible people other than the dummies in WS would take into consideration. A lot of MMs out there just with trivial tools learned in a crummy CFA course. In additon they capitalized (took to the balance sheet) the cost of issuing the debt (the investment banking fee) to them amortize it. All this adds to the cost of debt. Also, they are in a hole in regards to repaying this debt. Look at the cash flows. >1997 revenue of 661 mil. minus expenses of 641 mil. is 20 mil. profit from operations. ( 3% operating margin ) Now, analyst estimates of .40/share with 20mil shares outstanding would be $8 mil. That looks like a 40% growth rate to me, perhaps justifiying a forward PE of 40, or share price near $16. < And you have to substract the interest payments of 40 million. Ups, again a short. pancho