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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: xcr600 who wrote (3710)	11/12/1998 5:25:00 PM
From: Peter V	Respond to of 4634

THe only thing keeping DTLN at current levels is a buyout rumor. I stopped out at 27, but it looks good at these levels, assuming the buyout rumor is just a rumor. Given the crappy financial state of the company, who would buy it for a premium over the current price?

To: xcr600 who wrote (3710)	11/17/1998 10:20:00 AM
From: BDR	Read Replies (1) \| Respond to of 4634

Re: DTLN from The Street.com today: Herb on TheStreet: Why the Shorts Won't Give Up on Data Transmission, and Wondering About Brooke's Tobacco Deal By Herb Greenberg Senior Columnist The Tuesday trounce: *Commodity capers: When we last checked in on Data Transmission Network (DTLN:Nasdaq) back in September, the company had just hired Salomon Smith Barney to find a buyer, and a short-seller was quoted here as saying, "Good luck." The reason for his skepticism was that the bulk of the Omaha company's biz comes from providing quotes and financial data on commodity products to farmers -- not exactly a growth area these days. The shorts felt the company was facing increased competition from the Internet and, with a price-to-earnings multiple of 150 times trailing earnings, Data Transmission's stock wasn't bound for glory. Since then: Data Transmission reported its second straight quarter of earnings declines, which isn't really surprising considering the number of subscribers for its services also fell for the second straight month. Sales rose 23%, but only because the company raised prices. What's more, the company has no cash in its treasury, its debt is rising, its stock is higher and there has been no news on the takeover front. CFO Brian Larson says the company is "still in the process" of looking for a buyer. He blames the drop in subscribers on one of its satellites getting knocked out of service and the need to divert the company's salesmen from selling to physically repositioning satellite dishes used by existing customers. Now that the problem is fixed, Larson says, "sales are creeping up." What about competition for its services from the Internet? Many farmers, he says, are too far from main phone lines to effectively use the Internet. Besides, Larson says that Data Transmission's own Internet service, for some of its products, is starting to drum up business. He also says the company expects to grow its financial-services business, which currently accounts for only 8% of sales and competes head-on with Data Broadcasting (DBCC:Nasdaq) and every other company trying to offer stock quotes and other info to investors. Meanwhile, there's the issue of having no cash. "There's no reason for us to keep cash on hand," Larson says. Instead, he says the company prefers to borrow from its $65 million revolving credit agreement, which is nearly tapped out. "We're working on expanding that revolver by approximately $15 million, as we speak," he says. So, what's to like? Larson says the company has $15 million in "cash flow," described as earnings before interest, taxes, depreciation and amortization. Investors are "all looking at us as a cash-flow story," he says. That's increasingly the story of companies that don't have earnings. But in the end, a company's ability to generate earnings is all that counts. Thomas Chanos of Badger Consultants in Madison, Wis., which does research on companies, doesn't expect quality earnings to evolve at Data Transmission anytime soon. He doesn't believe higher prices will help keep subscribers and as a result doesn't think the stock is worth more than 10.