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

To: Steven Bowen who wrote (7622)	8/7/1998 10:58:00 PM
From: Alejandro	Read Replies (1) \| Respond to of 12468

Steve: What you and Mike have discussed is interesting. Whether it is right or wrong is subject to debate. I agree that being a re-seller is not the goal of WCII nor is it the most profitable. However, it is a source of income to keep the wheel turning in some markets. Further, isn't it a foothold to build from ? I get the feeling from others on the thread that they expect WCII to use all it's resources to maximize every market at the same time. Here is a question. If there are many shorters because WCII is perceived as a re-seller, why are Vogel, Grubman etc ( sp ) issuing buys for WCII. Certainly, they can calculate lines etc like you two have. Are you doubting Vogel et al ? ac

To: Steven Bowen who wrote (7622)	8/8/1998 2:08:00 AM
From: SteveG	Read Replies (1) \| Respond to of 12468

Bow- Wanted to relisten to the call before I tendered an opinion, as I had a lot of distractions during the live call. First I agree that I had expectation for more on-net customers. It was an on-track quarter, but certainly wasn't what you'd call an outstanding quarter when measured by CLEC revenues or margin growth. (BTW, Dan Zito did a good job of conservatively critiqueing the Q) There were 55 hubs as of last Q, so we added a total of 5. Bill said last month that they were planning on 125 by YE, and Nate softened this on the CC to "beyond 100". Listening to the emphasis on the significant savings in both $$$ and time installing P-MP (vs P-P), I wondered, as we considered before, if a new plan was to build breadth in their markets first and wait as long as possible to install hubs and radios until a) better prices from competing vendors was available, and/or b) P-MP was out in Q1 of 99. Since installation is so much quicker and cheaper with P-MP, this may not be a bad plan. Still, even more on-switch customers would have generated higher margins, and there's no reason not to migrate existing resells onto switch (45K were onswitch in Q1 which was 30% of customers, went to 70K onswitch Q2 which was 35%) and P-P in markets where they already are. Like you, I'm a little disappointed that their 5 major markets (NY, LA, BOST, DC, & DAL) had only 30something% on-net. Makes me wonder why - was this intentional? Can't get the migration? As I suggested earlier, maybe delays/problems getting the equipment up (since once it's up, it's very reliable) is the motivation for pushing vendor independance. Hopefully we'll get some vendor (LU?) financing on favorable terms that will safety-net the build, although Bill DID say that their $700MM alone would carry them to complete their '99 buildout into 40 cities. So any surprises like favorable financing would free us to make more strategic (& bargain) acquisitions without concern of debt market environment. And though voice currently pays the bills, I liked yesterday's acquisition as it underscores what I feel is their most profitable and future-proof asset - HBW LL. Building their own LD network (with MFNX dark) will allow them end to end connectivity, with a network that as Nate said was "solid as a rock" and "reliability surpassing fiber". Hopefully P-MP ATM will not be a challenge to get operational and will maintain this level of network integrity. (any reason to suspect this WOULDN'T be the case, Bernard?) Too late and I'm beat and crashing from a long hard week. BTW, I don't think the shorts are here because of the (lack of) margins/% on-net. I think they look for companies they perceive as vulnerable (eg., negative cashflow) and hope for others to get shaken out. They know that if there is stock to borrow, there are margin calls to be squeezed, but they typically don't know much more about telecom fundamental as any basis for their play. At least not ones I've spoken with. l8s- Steve

To: Steven Bowen who wrote (7622)	8/8/1998 7:53:00 PM
From: Kingpin	Read Replies (1) \| Respond to of 12468

I have difficulty with the assumptions that WCII has sold off due to the perception that it is simply a reseller of ILEC lines. To disprove this assertion you only need to marvel at the thrashing the other CLECS have taken. ICGX, for instance, posted solid on switch #'s for their quarter. I believe their new lines were around 90% on switch. The price of ICGX is down almost 60% from its high. ICIX just went EBITDA positive, the holy grail for all of the CLECS. Still the stock heads south. WCII's selloff is what happens to growth stocks in times of market uncertainty. Its just a fact. The funds are liquidating in order to increase the earnings power of there portfolios. The shorts are momentum players there to exacerbate the weakness. Of course, their intentions are to scare folks into questioning the very reason they invested in the stock in the first place. Or to become overly critical of minute shortcomings. Having said that, the question is still... which way next? If you believe the market will retest the lows Wednesday, as I do, then WCII heads lower again, IMO. What will be important is whether WCII holds its low at 27 3/4, if the sellof occurs. That is how some folks, like myself, look for bottoms in individual stocks. As far as trading this stock it would be a low percentage bet to attempt to catch the bottom at this point. The chart is terrible and momentum is in the shorts favor. One important issue that nobody has brought up is the poor on net numbers effect on a potential takeover. In my opinion, there is no way a Telco buys this company until they get a LARGE percentage on net. Why would anyone pay the money Bill is asking for a reseller with a couple of hundred thousand resold lines with 5% margins? WCII still has not proven the viability of this technology for the masses. You can bet potential suitors are watching this development very carefully. (Raise your hands if you feel like an idiot for calling the bottom at 40, 36 and 30. Oh well, live and learn. )