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

To: Jason Cogan who wrote (5579)	4/29/1998 1:07:00 PM
From: Steven Bowen	Respond to of 12468

Jason, I'm not really aware of how familiar you are with WinStar, so here's a couple points to help you understand some of your questions better. WinStar just recently switched gears and decided to pursue this direction, similar to the change ARTT decided to make a couple months ago. Their first market was NYC and they just entered it at the end of 1996. I think the switch came on line around Nov of 96. Around that time, I think they only had a couple hundred employees in the whole company. So they've only been in their oldest market for a little over one year. Their initial strategy was to enter each market as a reseller, and then down the road move customers over to their network as it gets built. Their gross margins were approximately as follows; Off- net (ie resale) 5-15% Partially On-net (WinStar's switch + Leased Loop) 25-30% Fully on net 60-65% In just one year in NYC, fully one half of their customers are now fully on net. Also, in just the one year in NYC, WinStar reached gross margin breakeven, something that takes the fiber based carriers many years to do. They've grown from one city, one switch a year ago, to 30 cities, mid-20's switches in two years. Seems impressivve to me for any size of company. Compare that to the rate that the giants like AT&T, MCI, and Sprint are entering local markets. Also compare the current positions and growth rates of WinStar to other CLEC's who have been building out their networks for ten years. After just a little over a year, WinStar is already catching up to the Teleports, Worldcoms/MFS's, ICIX's et, in important stats like buildings connected. They are also catching up or passing in terms of growth statistics, such as lines installed per quarter. In short, I think you're expecting a little too much in a little too short of time frame. WinStar has to be the fastest growing start up telecommunication company in the history of the world, and you want more? I guess only time will tell, but I'm sure glad I'm not short.