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Microcap & Penny Stocks : FRANKLIN TELECOM (FTEL) -- Ignore unavailable to you. Want to Upgrade?

To: David Hurd who wrote (32685)	4/24/1998 1:20:00 AM
From: Bruce Hoyt	Read Replies (3) \| Respond to of 41046

David, I think too many posters are having a little trouble when trying to understand what store FNet will be spending that $100+ million of IPO money in. Can we say FranklinMallOneStopShoppingDVGCenter Bruce

To: David Hurd who wrote (32685)	4/24/1998 12:02:00 PM
From: David D.	Respond to of 41046

David, FNET's raising of $100 Million on IPO does not guarantee that we will all be rich. It only means that FNET will have $100 Million in cash. True, FTEL will own nearly 70% of the shares in FNET. True that FTEL's balance sheet will indicate that for every share of FTEL we have significant equity. BUT, not always do people by stock due to shareholder equity. Especially an un proven company such as FTEL. The nature of the relationship between FTEL and FNET is such that FNET is still under the control of FTEL. That's because FTEL has 70% of the voting rights. FTEL has contol to oust the entire board or directors and staff, etc. of FNET if they want to. However, because FTEL holds shares in FNET, they also will have their balance sheet improved by the cash. Also, they will have their balance sheet improved by the value of the stock in FNET should it increase due to stock appreciation. FTEL will benefit mostly from hardware sales though. In my opinion the story has still got to play out. When FNET IPO's that will generate a lot of cash for FNET. There has been speculation that FNET will use that money to market it's international long distance presence. Hopefully, that will result in sales of long distance. Once the long distance revenues begin to flow, that will prove or disprove that FNET will be successful. FTEL's stock price will go up only after we start selling DVG's to someone other than FNET. There has been much talk on this thread that selling to FNET is a sale of DVG's and therefore revenue to FTEL. And, although that is true, it is neverthelss intracompany sales. No one is going to get excited about that. The price of FTEL stock is now tied to the revenue "outside" the FTEL-FNET connection. FTEL moved on stories in the past, it will take outside revenues to move it now. On the other hand, if WCOM would be a partner and provide $100 Million there would be no need for an IPO. And, a WCOM partnership would move this stock more than any IPO ever would. Unfortunately, I don't see that happening. WCOM would require at lease 51% control of FTEL and FNET. Frank will probably not give that up. Frank is an engineer. I have met him personally at WLV and spent time discussing the future of FTEL with him. I believe that bringing in a telephony heavyweight to run FNET is a boon for us all. I have confidence that we are in better shape than ever to be successful now. However, that's on the FNET front. FNET, once it starts telephony operations and generating revenue, that's when this thing will take off. Not due to the IPO. IMO David D.