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

To: Jason Cogan who wrote (5654)	5/2/1998 3:44:00 PM
From: Bernard Levy	Read Replies (1) \| Respond to of 12468

Hi Jason: Your message contains a certain number of different points, some regarding the validity of a WCII investment at all, some regarding the timing for such an investment. Most of your reservations have to do with debt issues. I want to reiterate that this situation is the norm for new telecom companies -- look at QWST, LVLT for example. Even my biggest holding, LOR, fits this paradigm, except for the fact that it has a relatively low-margin satellite construction business, and a few profitable operations such as Skynet, which in effect subsidize all the red-ink generating communications ventures. Borrowing money is not a measure of how this company is performing. There are only 2 valid and highly correlated metrics for evaluating how WCII is performing: a) rate of new line installation and acquisition of roof rights, b) rate of customer recruitment. For both of these metrics, WCII's performance is spectacular. Vogel's report contains a curve comparing the rate of line installation for WCII with Teleport's rate. The difference between Winstar and Teleport is mind-boggling. This will be accelerated when point to multipoint technology is deployed. As I indicated, P-MP will decrease the cost of installation of T1-line equivalent to $200 per line. By comparison standard T1 lines are very expensive to install (require repeaters and a lot of labor) and installation costs a few $Ks per line. HDSL and the upcoming HDSL2 are cheaper but still have an installation cost of several times $200. The bottom line here is that wireless has an intrinsic cost and deployment advantage over its wired (fiber or copper) competition. Fiber presents only an advantage if you really need a huge data pipe, since P-MP will ''only'' be able to offer approximately 40Mb/sec (a T3 equivalent) to each customer. Concerning WCII's customer base, it is expanding rapidly and includes big names such as Lotus in Boston (per Brian Coakley). Paul Ferguson and others may be able to complete this picture by identifying other existing customers. As for the timing for getting in WCII, there is obviously no guarantee that now is the optimum time. I was waiting and jumped in when I saw the reversal at $35, but obviously if the market falls over a cliff, we could easily see the $30-$32 range. However, at its upcoming CC, WCII will go over its line deployment progress. When the data starts sinking in, and analysts make their comparisons with Teleport, etc... I expect that WCII will resume its upward march. We are now in a consolidation/ trading range phase which could last a while, but lomg term, I have no doubt WCII is going up, and I hope that WCII is not for sale. As for the compensation of WCII's executives, it does not bother me too much, as long as they keep executing. As a reference point, Bernie Schwartz, LOR's CEO, is extremely well compensated. Finally, I would like to indicate that WCII is clearly in the high risk/high payoff part of the investment spectrum, and if you or others feel more comfortable with companies which always earn money, but are strategically well positioned, such as WIND, I do not have a problem with that. Best regards, Bernard Levy

To: Jason Cogan who wrote (5654)	5/2/1998 8:46:00 PM
From: Alejandro	Read Replies (2) \| Respond to of 12468

<<Everyone of you is buying the common equity. Essentially, the last one in line to be paid.>> Jason: You are correct that others would be paid before the shareholders. However, this would only happen in liquidation. I never invest in an equity if I have to worry about bookvalue and liquidation and the amount of preferred who would have first claim. I do look at long term debt. My gut feeling is that WCII has acquired more assets than I thought they would. I expected debt to buildout the system. The bankruptcy acquistions made sense. The 15 % of ARTT I don't understand yet. On that point, I rely on management. They have been doing fine. On the discussions by others on Vector ratings etc. The 3.80 is bogus. I don't follow that logic. As has been stated, if one were to follow it, there are many good shorts. Also, I don't rely on ValueLine. It is earnings driven and therefore throws 5's for timeliness and safety at startup companies. With WCII, we know what it is doing, how it is going about it, the competition, the market and profits whether re-sale or own network. The only thing I fear is that a technological revelation could make wireless obsolete. By that time, we would all have taken our profits. Question for you. Which of the bigboys need WCII more that the others. I venture BT. See ya Ali