*****slightly OT*****
>Nope. No operatives out in SF. Not a big fan of that town. They don't let you jaywalk and whats the deal with hailing a cab out there? Not to mention the jello that is under the marina district. Niners suck too.
oh boy, you'd really dig puddle city then (i.e., seattle). you can't even make a right on green if a ped has one measly foot anywhere in the crosswalk. try that shit in dc and you'd get ganked -- for your money or your gold or your jew'ry or sumpthin'. actually, after the big snapple (of course), s.f.'s my favorite (american) town. quite true, unions keep the cabbie quota tight, but only tour-rats go to the wharf. head south to a north beach kerouac coffee shop (mario's bohemian cigar store and cafe will do) or over to a jazz dive off divis.
and hey-zeus! the mission's gotta have the best burritos this side of the rio. big as your forearm, amigo.
>I need to circle back to the Orange PLC deal in jolly old England. At first glance I thought CMVT actually displaced Unisys but apparently that is not the case.
i must spend too much time on this side of the pond -- i'd never heard of orange PLC. for your possible interest, i copped the following off yesterday's thestreet.com.
notsosureididagoodjobofconvincingyou,
-chris.
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The Anglo File: Will Orange Be Pipped at the Post?
By Nick Watson
U.K. Correspondent
2/24/99 9:00 PM ET
Orange Communications (ORNGY:Nasdaq ADR) is still a sweet investment, but consolidation in the industry may ultimately squeeze much of the juice out of it.
Orange will release its earnings for 1998 on Thursday, and a survey of 13 analysts conducted by Hemmington Scott, a British brokerage and information provider, calls for a loss of 8.70 pence for 1998, compared with a loss of 12 pence in 1997.
For any cellular company, of course, the bottom line is only one measure of performance. So analysts will also be focusing on average revenue per user, or ARPU, as well as churning and penetration levels for clues to Orange's shelf life.
The backdrop to the sustained improvement in Orange's position is the unflagging growth in the U.K.'s cellular market. After a record fourth quarter, year-on-year cellular penetration in the U.K. increased by 54.1%, to 22.1% of all phones in the country. This is only marginally lower than the European average of 23%.
Thanks to some clever marketing, Orange did particularly well in snagging these newcomers. By the end of last year it had increased its market share among the four mobile operators in the U.K. to 16.6% from 14.2% at the end of 1997.
Yet behind this rosy picture lies a couple of disquieting developments for Orange. The first is that 59% of the new subscribers to Orange in 1998 were pre-paid customers, who by their very nature tend to be the less affluent and more credit-challenged segment of the population. Inevitably, this will mean a decline in ARPU as these customers make up a growing proportion of Orange's subscriber base.
Alex Gunz, analyst at ABN Amro, predicts that Orange's ARPUs slipped by 4% during 1998, and expects this decline to continue as Orange focuses on the pre-paid segment of the market.
The increasing importance of this part of the market puts Orange at a particular disadvantage because the company's success has been built on attracting the high-end user with its excellent quality of service.
"Orange is in a relatively difficult position as the question is how it can sell pre-paid propositions effectively," Gunz says. Gunz has a hold recommendation for the stock and ABN has had an investment banking relationship with Orange.
Getting Global
The second, and arguably more crucial, development involves consolidation in Europe's mobile phone industry, a process thrust to the fore by the merger in January between Vodafone (VOD:NYSE ADR) and AirTouch (ATI:NYSE ADR).
The Vodafone/AirTouch deal created the first genuine global mobile telco, and apart from some overlapping businesses in Germany, the combination has created a seamless footprint over Europe. The significance of this deal has not been lost on the other operators: Get global or get out.
Orange's overseas assets will have only a very limited impact on its consolidated results because only one network is operational, and that is not even represented in the company's profit and loss statement. However, ABN Amro's Gunz believes that "in the medium term, the company's international investments look set to bear fruit."
Currently, Orange is a reseller of mobile service in France and Germany, and a member of three consortia in Austria, Belgium and Switzerland. The company also has a clear international strategy of looking for further license opportunities elsewhere in Europe, such as in Hungary.
According to Bear Stearns, all three countries where Orange is a consortia member look potentially promising. Bear Stearns has a buy recommendation for the stock and it has had an investment banking relationship with Orange.
Wireless penetration in Austria was about 29% at the end of 1998 and Bear Stearns expects this to reach 45% at the end of 2000; in Belgium it was 17% and it forecasts this to rise to 38%; and in Switzerland it was 24% and it sees this rising to 66%.
As a result, Bear Stearns expects the three operations to become EBITDA positive within three years of operations, which is in line with Orange's experience in the U.K., as well as the company's outlook.
Orange has a proven track record of being able to thrive in highly competitive markets. Orange was the last of the U.K.'s four mobile operators to launch its service, yet thanks to its high quality service and marketing prowess, it has still been able to carve out a market share of over 16%.
In Switzerland, for example, although Orange received the third wireless license, both Orange and another newcomer, diAX, were awarded the licenses at the same time. Effectively, Orange faces only one established operator when it begins operations this year.
Vodafone's merger with AirTouch may, oddly enough, create an opening for Orange in Germany. Vodafone is seeking to shed its 17% holding in E-Plus -- a venture owned by Veba and RWE -- in favor of AirTouch's more profitable stake in Mannesmann Mobilfunk.
Vodafone's stake in E-Plus is estimated to be worth about $25 million, and the reports said Orange would be prepared to go to the market to raise cash for a potential deal.
Here's the Rub
The key challenge for Orange in making any potential acquisitions is funding. Orange's balance sheet is perhaps not as healthy as it should be. Net debt is currently around 1.5 billion pounds versus a market capitalization of over 1.1 billion pounds, and the proportion of debt is expected to continue rising. According to James McCaffrey, analyst at SG Securities, "Orange's gearing is stretched in terms of the traditional definition."
Also, despite Orange's much-heralded ventures in Europe, licenses for the Netherlands and Greece have notably failed to materialize. "Orange's international strategy has had limited success," says McCaffrey. McCaffrey has a buy recommendation for the stock and SG Securities has had an investment banking relationship with Orange.
On the plus side, Orange does have its shares, which McCaffrey describes as "worth their weight in gold." Orange shares have marched steadily upwards since the beginning of 1998, and have soared 169% over the past 12 months, to close Wednesday at 953p.
Orange has always found itself one step behind the competition: It was the last of the U.K.'s four mobile operators to set up shop, it was behind the game in pre-paid services, and it has only recently began to focus attention on Europe. But as history shows, Orange may saddle its horse slowly, but it rides like the wind. |
