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Technology Stocks : Vimpel Comm (VIP) ADR's of the Russian Cellular Phone Co. -- Ignore unavailable to you. Want to Upgrade?

To: Urlman who wrote (151)	10/11/1998 10:20:00 PM
From: TokyoMex	Respond to of 283

Update for Oct 11, 1998 FINALLY, SOME GOOD NEWS This week's market events may be signaling that stocks have seen their worst, and bonds their best - at least for now. We've been looking for an interim bottom in stocks during October, but only after more short-term weakness. We think Thursday's bottom may mark the low for awhile. Other events were the collapse in the dollar, a pullback in gold, and a rebound in the general commodity price level. All of these events suggest a short-term change in the stock market's direction - to the upside. ALCOA JUMPING, SEARS HOLDING Sometimes it helps to look at individual stocks in an index to get clues about short term direction. Aluminum stocks had been one of the sectors badly hurt by the plunge in commodity prices. Their rally at this point would be consistent with the rally in commodity prices. Chart 4 (see Chart 4) shows Alcoa (AA) breaking through a yearlong down trendline and heading for a test of its spring high near 79. Retail stocks are also showing signs of stabilizing. Chart 5 (see Chart 5) shows Sears (S) bouncing off crucial chart support formed in late 1997 near 40. Another Dow retailer, Wal Mart (WMT), has bounced off its 200-day moving average. Since all three stocks are in the Dow, their chart pictures support a short-term bottom in that index. WHAT TO DO? We remain long term bears on stocks and believe that 1999 will see lower prices. So how do we handle an intermediate upturn from here? The most obvious action is to do some short-covering. Those late-comers, who held on during the market's slide, might want to use a fourth-quarter rally to do some selling. It's time to switch some long bond holdings to the short-end of the yield curve, mainly Treasury bills. We still favor defensive stocks. One group that has looked strong recently has been food. A couple of attractive candidates are Campbell Soup (CPB) and Sara Lee (SLE) (see Chart 6). Our favorite defensive group - the utilities - have entered a downside correction along with bonds. While some profits could be taken at this point, our longer-range outlook for this sector remains positive.

To: Urlman who wrote (151)	10/11/1998 10:25:00 PM
From: TokyoMex	Read Replies (1) \| Respond to of 283

You mean this upgrade by MMs ? 10:15am EDT 30-Sep-98 Salomon Smith Barney (POSTOLOVSKY/JENSEN (44-171) 721-65) VimpelCom - Deserving Better Than This VimpelCom - Deserving Better Than This 09/30/98 --SUMMARY:--VimpelCom--Telecommunications Services Hit by the crisis, but less so than other Russian telecoms Remains a solid business despite negative short-term outlook Grossly undervalued on fundamentals A highly geared option on Russian recovery - 2S (Outperform, Speculative) rating ---FUNDAMENTALS:--(based on FYE of 12/98)------------------------------------ Current Rank........:2S Prior: Price ..............:5.69 P/E Ratio(12/98):6.3x (12/99):3.0x Target Price........:N/A Return on Equity 97.:N/A% 52 Wk Price Range...:59.12 - 5.50 LT Debt-to-Capital..:N/A% Book Value..........:8.84 Shares Outstanding..:25.70 mil Dividend/Yield......:N/A/N/A% Proj.5yr EPS Grth...:N/A% Revenue(1998).......:376 mil Country.............:Russia Tot Equity Mkt Cap .:145 mil Convertible.........:No Comments............: OPINION:------------------------------------------------------------------ **US recipients of this report should contact John Jensen (44-171) 721-1711 Being part of the Russian economy, VimpelCom is going to suffer the consequences of the country,s financial crisis. However, the company is likely to be less affected than other Russian telecoms. Despite a negative short-term outlook, fundamentals remain strong and, in our opinion, VimpelCom is grossly undervalued compared with other European operators. We believe that the stock has significant upside potential, while accepting that this is unlikely to be realised until investors return to Russia. We consider the stock a highly geared option on the Russian recovery and rate it 2S (Outperform, Speculative). Hit by the crisis, but less so than others Russia,s financial crisis is likely to have a significant impact on VimpelCom, negatively affecting its short-term performance as well as its growth prospects; 3Q98 results are likely to be disastrous as the company writes off its short-term investments and realises massive foreign exchange losses. In the short term, VimpelCom will probably see a contraction of its subscriber base and sharp decline in usage rates. At the same time, relative to other Russian telecoms, the company is likely to be less affected by the financial turmoil. Its dollar earnings will not be eroded by the ruble devaluation. It does not have massive short-term debts. It is not subject to tariff control and does not bear a risk of hard currency expropriation. Remains a solid business despite negative short-term outlook Despite a temporary setback, the mobile industry in Russia is likely to return to growth in the short term. With a sensibly structured debt, a relatively price-insensitive core subscriber base and a virtually complete D-AMPS network, VimpelCom is poised to survive the crisis. Following a sharp decline in 4Q98, we expect margins to return to growth by the end of 1999. The commitment to develop a GSM-1800 network and the ability to finance it internally should provide VimpelCom with a competitive advantage in the long run. Undemanding valuation On the basis of fundamentals, VimpelCom is grossly undervalued compared with other European operators. Even the worst-case scenario suggests a 60% growth adjusted discount. We appreciate that a large part of this relates to the country risk. At the same time, despite being less affected by the crisis, VimpelCom has significantly underperformed other Russian teleco stocks since the beginning of August. Given its high share liquidity, business transparency, strong fundamentals and quality of management, we believe that VimpelCom will be one of the best plays on the Russian market - as soon as the market settles. However, while investor sentiment towards Russia remains negative, we do not see any triggers which would stimulate growth in the company,s share price in the near future. We consider the stock a highly geared option on Russian market recovery and rate it 2S (Outperform, Speculative).