Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : AT&T -- Ignore unavailable to you. Want to Upgrade?

To: polarisnh who wrote (2455)	5/25/1999 12:20:00 PM
From: Probart	Read Replies (1) \| Respond to of 4298

GLOBAL CROSSING JUMPS INTO RETAIL WITH U S WEST MERGER May. 24, 1999 (FIBER OPTICS NEWS, Vol. 19, No. 21 via COMTEX) -- Bermuda-based Global Crossing [GBLX] has shifted gears, moving into a new business strategy. The international telecommunications carrier May 17 announced it will merge with Denver-based U S West [USW], an incumbent local exchange carrier. The move signals a new corporate vision for Global Crossing, considered to be a carrier's carrier until recently. Now, on top of trying to sell bandwidth to carriers, the company will sell local voice services and long distance to end users. Global Crossing indicated this might be the case in mid-March, when it announced it would purchase Frontier Corp. for $11.2 billion in Global Crossing stock. Frontier has an extensive retail business. Now Global Crossing is preparing to lap competitors. But is the jump into retail a wise move for Global Crossing? Craig Johnson, principal at PITA Group, a high-tech consultancy in Portland, Ore., says the purchase of U S West is a flash of brilliance. "The players that will win in the long haul are the players that have end users," Johnson says. "Carrier's carriers can negotiate 10-year back-haul deals but the margins there are growing thinner and thinner. With end users, you always have the possibility of offering new services on top of older services, and building customer relationships. Global Crossing would be buying a set of customers that can generate revenue." Johnson says the purchase will leave companies like Qwest Communications [QWST] of Denver and Williams Communications [WMB] of Tulsa, Okla., scrambling for end users. Jeffrey Kagan, president of telecommunications consultancy Kagan Telecom Associates in Marietta, Ga., also sees the deal as a grab for customers. "We are seeing the new breed of phone company merge with the incumbents to be able to have the best of both worlds -- new technologies and all the customers," Kagan says. However, Michael Ruddy, senior fiber optics analyst at telecommunications consultancy Pioneer Consulting in Cambridge, Mass., thinks the acquisition is risky. "Global Crossing has been doing so well with the carriers' carrier model, you do have to ask, 'Why take the risk?' Ruddy says. "This appears to be Global Crossing saying, 'We want to become an AT&T [T].' They are positioning themselves against the incumbent [local exchange carriers] and the AT&Ts, which are their potential customers." In a word, Global Crossing could alienate their customers in the carriers' carrier business. The stock market has offered a sluggish reaction to news of the merger. Global Crossing's stock fell from $61.38 May 14 to $58.69 May 18. U S West's stock slipped from $62.25 to $54.31. Taking Stock Under the terms of the merger, U S West will buy 9.5 percent of Global Crossing stock, or approximately 39 million shares, for $2.45 billion. The new company will be 50 percent owned by Global Crossing and Frontier shareholders and 50 percent owned by U S West shareholders. Global Crossing and U S West plan to create two separate trading stocks to give investors a choice of high-yield or lower-yield options. "In terms of the global services providers [class G stock] we are talking about the Global Crossing subsea and terrestrial fiber optic network," says Solomon D. Trujillo, chairman, president and CEO of U S West. "We are talking about the U S West !nterprise data activities. We're talking about the Frontier U.S fiber network; the Internet data and long-distance capabilities of all entities." The second stock is called class L, for local service provider. Under it, Global Crossing will report on its incumbent LEC activities. Global Crossing, U S West and Frontier had combined 1998 sales in excess of $15 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of more than $6.2 billion. The combined companies currently have more than 115,000 route miles of fiber.

To: polarisnh who wrote (2455)	5/27/1999 8:04:00 AM
From: polarisnh	Respond to of 4298

Gabelli Growth: Why it Dumped Consumer Staple Stocks Associate Editor: Len Hollie Howard Ward is uneasy. The Gabelli Growth fund (NASDAQ:GABGX - news) manager sold all of his Coca-Cola (NYSE:KO - news) , Gillette (NYSE:G - news) and Procter & Gamble (NYSE:PG - news) positions in April. This marks the first time that the fund has not held any large consumer staple growth stocks. 'I am concerned that this is the first time that the fund has not held any of those stocks,' concedes Ward, who has managed the $2 billion fund since 1995. 'I also don't own G.E. (NYSE:GE - news) or Wal-Mart (NYSE:WMT - news) , and I do feel exposed to the S&P 500 in so far as not owning the large cap stocks. But, I'd rather be one of the first ones out of a sector than one of the last ones in.' In their place, Ward has added Intel (NASDAQ:INTL - news), AT&T (NYSE:T - news) and MCI Worldcom (NASDAQ:WCOM - news) . 'I feel that the growth in the U.S. economy is predominantly in the information technology industry,' says Ward. 'I strongly believe that in a growth fund, you want the wind at your back. And there is none in large cap consumer growth stocks. But there is wind at your back in the information technology stocks.' Ward says Coca-Cola, Gillette and Procter & Gamble have been uniformly overpriced and all of them have been stumbling. He notes that their growth expectations have come down, but the declines have not been fully registered in their valuations. Indeed, Coke closed at $68.50 on Wednesday, down from its high of $88.94. But it still trades at about 50 times trailing 12 months earnings. Gillette closed at $50.94, down from $64.38, but still 53 times trailing earnings. P&G closed at $95.75, nearly 35 times earnings and just $8 off its 52-week high. 'If I owned them now with a low cost in taxable accounts I probably wouldn't sell them,' Ward concedes, since they would generate huge capital gains bills for shareholders. But he adds, 'I don't think they are among the 50 best values in the market. I would not want to go back and buy these stocks until they were at least 15% to 20% lower than they are today.' Escalating stock prices also prompted Ward to reduce the fund's position in Microsoft (NASDAQ:MSFT - news) last month from 3.5% of the portfolio to 1.2%. Mr. Softee closed Wednesday at $78.50, down from its 52-week high of $95.63, but still more than 62 times trailing earnings. 'I cut the stake when the stock price was in the mid-$90 range. But now that it's fallen to the $70s, it's starting to look attractive to me,' concedes Ward. 'But I'd be reluctant to add more Microsoft to the portfolio, mainly because I only want 25% of the money in the portfolio in the tech sector.' 'If I didn't have a 25% restriction, I'd buy it now,' he adds. 'But I think IBM (NYSE:IBM - news) , which at 5% of the portfolio and is my biggest tech stake, is a better value than Microsoft. I think Sun Microsystems (NASDAQ:SUNW - news) and Cisco (NASDAQ:CSCO - news) are better values. I wouldn't want to lose them in order to add more Microsoft.' Ward also sold the fund's entire stake of 750,750 shares of Charles Schwab (NYSE:SCH - news) in April for more than $19 million because the price had climbed too high. He notes that Schwab was beginning to trade like an Internet stock, and he has steadfastly shunned the high-flying sector. To be sure, Scwab rose to a high of $155 from a 52-week low of just $18.50. However, on Wednesday it closed at $108.75, up $12.13. 'When you're running a mutual fund, the goal is to beat the S&P 500,' Ward notes. 'And, if I can't do that, then what's the point. This might as well be an index fund.' To his credit, Ward has been slightly better than the benchmark S&P 500. So far this year (through Tuesday), the fund is up 5.71%, beating the S&P by 0.81 percentage points. In 1998, the fund returned 29.79% and bested the S&P by 1.21 points. Other stocks among the fund's top 10 holdings are Home Depot (NYSE:HD - news) , Northern Trust (NASDAQ:NTRS - news) , Cisco Systems, Marsh & McLennan (NYSE:MMC - news) , Sun Microsystems, and Time Warner (NYSE:TWX - news) . Is Ward mulling a return to large consumer staples any time soon? He concedes they are normally a core holding for large cap growth funds, and that at some point he may go back to them. But, he says: 'I'll be very surprised if that happens by the end of the year, unless the stock prices get much lower than they are right now.'