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Technology Stocks : STAR Telecommunications (STRX) -- Ignore unavailable to you. Want to Upgrade?

To: BlackCat who wrote (293)	8/17/1998 12:00:00 PM
From: Spaw	Read Replies (1) \| Respond to of 780

Cat: Please fill us in... What is your source? Is it reliable? --spaw--

To: BlackCat who wrote (293)	8/17/1998 1:40:00 PM
From: Spaw	Read Replies (2) \| Respond to of 780

Cat, News is accurate. The Board meets this afternoon and will decide either to purchase PT-1 or to delay until next year. I am sure that Star's board is aware of the impact an outright acquisition will have on the share price. Let's hope they let this influence their actions. The news will be released officially on BusinessWire by tomorrow at the earliest. --spaw--

To: BlackCat who wrote (293)	8/17/1998 6:05:00 PM
From: Terp	Read Replies (1) \| Respond to of 780

This must be the reason for the declining stock price. Somebody knew all along what was going on. Since the CEO is intent on doing this deal, this stock is history for at least a year. There is enough bad publicity around about how bad this deal is for STRX. Now, they have to do an outright purchase, which will mean more dilution to the depressed stock, leaving a mess for some time to come. If the reports are correct, this was their chance to back out of the deal and it sounds like the board will flatly refuse to stop it. Therefore, we will probably see single digits before we ever see 20 again.

To: BlackCat who wrote (293)	8/18/1998 9:35:00 AM
From: BlackCat	Read Replies (1) \| Respond to of 780

More of the pt-1 report from Bear yesterday: One distinct advantage to the purchase accounting method is note worthy. With purchase treatment, management can issue shares and options to key distributors in exchange for multi-year exclusive distribution contracts with performance requirements structured in. This could be a significant competitive advantage to the PT-1 debit card business going forward, and since investors appear concerned about distributors going over to competitors, this should be the final nail in the coffin of one of the major fears investors have expressed with respect to the transaction. Based on the analysis of STAR's second quarter results, we are revising our estimates for STAR for both 1998 and 1999 on a standalone basis. While minutes growth and profitability were extremely robust in the quarter, the revenue mix has shifted toward lower-priced, higher-margin routes in Europe. As such, we have brought our expected rate per minute down going forward. We are now forecasting revenue of $602 million and EPS of $0.32 in 1998 and revenue of $827 million and EPS of $0.50 in 1999. While this may seem like a steep reduction in our 1999 EPS outlook, we would point out that revenues continue to be extremely robust because of solid minutes growth and execution on STAR's expansion plans. This revision also includes a penny of dilution in 1998 for the acquisition of Qwest fiber, although we have attempted to factor in cost benefits going forward. Also, we are still looking for 56% EPS growth from 1998 to 1999 and expect EPS growth to continue at the 40% plus level for several years to come. As such, the current multiple of 32.6x our 1999 EPS forecast seems quite low. Finally, we have used the FCC's decision as an excuse to revisit our pro forma model for STAR/PT-1 and are presenting our expectations below. We would point out that we have received little guidance on 1999 from management as they are still working on their own expectations for the combination, but believe we have taken a fairly conservative stab at both PT-1's potential top-line growth and the potential for cost savings on the network side from the combination. With purchase accounting factored in, we are looking for revenues of $726 million and EPS of $0.33 in 1998 and revenues of $1,465 million and EPS of $0.74 in 1999. Even with purchase accounting, this transaction is not only a big strategic plus, but accretive to shareholders as well. Can't confirm that this is verbatim--This is exactly how it was sent to me though.