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Strategies & Market Trends : The Round Table: A work by the squares of the SNDK thread. -- Ignore unavailable to you. Want to Upgrade?

To: Ausdauer who wrote (84)	3/22/1999 10:50:00 PM
From: Bill Zeman	Read Replies (1) \| Respond to of 194

Aus IDTC network expansion is definitely being shown in D&A. Read this from the most recent 10Q: "Depreciation and Amortization. Depreciation and amortization increased 207.9% from approximately $3.8 million for the six months ended January 31, 1998 to approximately $11.7 million for the six months ended January 31, 1999. As a percentage of revenues, these costs increased from 3.0% for the six months ended January 31, 1998 to 4.0% for the six months ended January 31, 1999. These costs increased primarily as a result of the Company's higher fixed asset base during the six months ended January 31, 1999 as compared with the six months ended January 31, 1998 due to the Company's efforts to expand its telecommunications network infrastructure, enhance its Internet network and expand its facilities. The Company anticipates that depreciation and amortization will continue to increase as the Company continues to implement its growth strategy." sec.yahoo.com One thing for sure is that they are going to keep aggressively expanding their network, especially into newly deregulated areas. I am not too worried about the possible effect on earnings though. As you can see D&A is still only 4% of revenues even though it almost tripled in the last year. As network expansion grows, so will revenues and profits. I don't think they will get too far ahead of themselves. Howard Jonas has made the company profitable and he really seems to have a feel for keeping it that way. I don't think he will jeopardize profitability by over expanding for very long if at all. He knows what the street likes to see in a company and is pretty good at looking out for shareholder value. Look at a long term chart. quote.yahoo.com The company became profitable in 1997, and thus the rise from 4 to 40. Then in 1998 they had some earnings setbacks similar to SNDK: a young company getting off the ground having some fits and starts. They are poised to get back on track with sequential earnings in the next 2 or 3 quarters. By then they will not only be rid of the drain on earnings caused by the internet business, but they will be routing most of their minutes over their own network and receiving a much bigger margin on their calls. HTH Bill Zeman