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

To: Steven Bowen who wrote (10540)	3/5/1999 8:36:00 AM
From: wrm1	Respond to of 12468

VERY friendly numbers just released. Bond Market screaming, and so is WCII ( last @ 35 ).

To: Steven Bowen who wrote (10540)	3/5/1999 8:38:00 AM
From: TheSlowLane	Read Replies (1) \| Respond to of 12468

I believe I heard about the 1-3 year Millenium deals from a WinStar rep. I also thought that they said the take rate on the 3-year deal was pretty high. Would be nice to have a transcript of the call, did anyone write down every word? I wouldn't be surprised to see more deals with MFNX also. I understand MFNX is building a fiber ring around Boston (along 128, where WinStar is building out add'l hub sites). Also - I liked what Rouhana said about building-centric marketing. Something like 1,000 lobby events in Q4? That's a lot of ice cream, muffins and trinkets - but said they were extremely effective in "softening up" the building prior to a sales assault. When was the last time your RBOC brought you anything besides a headache? Anyone that thinks TGNT understands how to market more effectively than WCII (because they run flashy, double-full-page ads) doesn't understand the business. Sure...a double-barreled sawed-off shotgun makes a bigger hole than a laser-guided rifle, but you better be pretty close to your target.

To: Steven Bowen who wrote (10540)	3/5/1999 9:55:00 AM
From: SteveG	Respond to of 12468

H&Q (this is sort of new coverage since Noel left and Langner took over, and since H&Q hadn't put out anything on WCII for a long time): Yesterday, WinStar reported its 4th Q 1998. The company reported $81.1M/($3.80). We were at $79.9/($3.92). First Call consensus was ($3.86). The company made a number of important announcements during the 4th quarter, including the $2B Lucent vendor financing deal and its agreement with Williams. Most importantly though, we see the development of WinStar's local markets and initial success of its Millennium marketing programs as keys to setting the table for 1999. We rate WCII BUY. Operating Results: WinStar Communications had a number of important milestones in the 4th Quarter. The company announced two significant deals with Lucent and Williams, embarked on an aggressive marketing campaign to sign-up customers on-net and announced plans to roll-out services in 50 markets in Western Europe and Asia. Additionally, WinStar continued to develop its existing markets, driving customers on-net at a rapid pace. Some highlights include: The Lucent Deal: WinStar announced a 5 year strategic deal with Lucent as its core technology partner. As part of the deal, Lucent will provide WinStar with $2 Billion in vendor financing. This provides WinStar with a significant resource to support its network build-out. Williams Agreements: WinStar has entered into an agreement to sell 2% of its long term national broadband local access network to Williams for $400 Million. As part of the deal, WinStar will purchase long haul circuits from Williams, lowering its costs of operation over current sources. Priming the Pump – Customer Acquisition: While we feel that many of the developments of the 4th Quarter are important, we are most impressed by the success of WinStar's Project Millennium marketing program. Project Millennium provides customers with free local service through the year 2000 if a customer signs a 3 year term contract. There are lesser discounts for shorter terms. All Project Millennium customers sign a minimum 1 year contract. The program is aimed at providing WinStar with two things, on-net customers and long term customer relationships. We believe that it is succeeding at both. In New York, WinStar's most developed market, 93% of new line orders during the Millennium promotion were on-net orders. 60% of the orders were for 3 year contract. Success rates were lower in less developed markets, but we would expect those numbers to improve as WinStar connects more buildings to its network. Importantly, we believe that this customer acquisition sets the stage for WinStar to leverage its network, as it is built, for additional services beyond basic telephony and data services. An example of the types of services WinStar can provide, once it has a link into the customer, are the WinStar New Media products. Informational services such as WinStar Telebase, allow the company to earn incremental revenues on existing customer lines. We expect WinStar to expand the breadth of offerings of this type through 1999. Financial Results: The company reported $81.1 Million in revenues for the 4th Quarter. This is up from $61.1 Million for the 3rd Quarter. Important CLEC revenues, driven by the Millennium marketing program, were $56 Million. This is up from $37 Million in the 3rd Quarter. A gain of 49% sequentially. EBITDA loss was up from $$79.2 million is up from $48.3 Million in the 3rd Quarter, the increase is attributed to more aggressive roll-out of markets and cost associated with the company's market programs. Opinion: We believe that WinStar is setting the stage to become a leader in the broadband services market through its wireless network. It has a significant time to market lead over its wireless broadband competitors with regard to customer sign-up and market development. Outside of this group, there is limited competition beyond the ILECs in many of WinStar's target buildings. We see the company's current efforts in customer acquisition and establishment of long term relationships through the Millennium marketing program as an important key to leveraging the wireless broadband platform the company is building. While we expect the company to be successful selling traditional telecom services over this network, we fully expect the company to continue to develop additional, data-oriented services, both through partnership and internally through the company's New Media division to drive additional revenues over those wireless customer. We believe that WinStar is one of a small number of service providers that is positioned today to begin to provide these types of services to customers. We have seen shares move down sharply over the last couple of weeks, currently trading in the low $30's, from a high of the mid $40's. We believe that the company is currently one of the more attractive issues in broadband communications services at these levels, and that the stock has been driven down on concerns about the quarter which have turned out to be unfounded. We rate WCII a BUY.