Monday's Barron's has an article on Jim
Callinan's Fund (RSEGX) which invests in many Net Stocks.
DISH, NSOL, MACR, CREE, PSUN, PSIX, CACS, ABOV, WTSLA,
AMZN, AOL, CMGI, LCOS, XCIT, SEEK, INKT, ZQK, NITE,
VSIX are mentioned in the article. A synopsis is
linked to the Barron's Synopsi table at
The Barron's article links ZQK to the KWK symbol,
which is incorrect (KWK is an oil company)
When you compare costs between DISH and DirecTV
one important thing to keep in mind is that DISH owns
its sats while Direct does not. Direct must buy the
bandwith and thus pays a high mark up. In the long run
DISH wins hands down.
During recent Senate hearings, Charlie indicated
that the addition of an additional 1 million subs
would get DISH to a breakeven point, with profitability
above that level. That was about 300,000 subs ago.
I see your point but, DISH is on pace to sign up
1,500,000 new customers this year alone. Most people I
speak with are very happy with the system and its
services. In reality i would say that less than 5% will
cancel after a year. And maybe only 10% after two yeras.
DISH will make mad money off of all these new
subscribers. Especially when they are only paying 6 3/4%
interest on there long-term debt which was raised to
launch the new sattatelites. Also DirecTV has to pay all
the manufactures of there dishes who eventually
subscribe to there service. Aside from local retailers
Echostar manufactures all there own equipment. The cost of
Primestar to manufacture there dishes was over twice the
cost of DISH and they leased there equipment to there
customers which means that if the people decided to cancel
Primestar was stuck with the huge crap dish.
Signing up for one year doesn't mean that
Echostar will make back the money invested in the
equipment though. I heard some numbers from Primestar that
it takes somewhere in the neighborhood of 20 to 24
months to recoup the initial installation expenses. (I
can only assume that the costs are pretty standard
industry-wide) DISH will need some deep pockets to wait for
profatability 2 years down the road. Don't get me wrong though,
I do think it's possible for them to succeed, it's
just that I don't think these recent surges are
justified. This puts them in the class with the Amazons and
other overpriced, overhyped stocks.
One of the major issues that led to the demise of
Primestar was their enormous churn on customers. If you
just look at it from a common sense point of view, the
reason these customer's came and went so quickly was
because they had little or nothing invested in the
installation, therefore having nothing to lose by
disconnecting. What scares me about all of this discussion about
the virtues of rapid subcriber growth for DISH is how
they're going about it. If they give away the equipment
just like Primestar did, won't they be seeing
increased churn rates as well?
I think you're right about the daytraders. Do
you, or does anyone else, know if the float is right
on the YaHoo site? As we know, the market cap isn't.
We've had some big share days recently which would
indicate substantial trading activity. Like you, I'm not
too worried about the long term prospects - as long
as the new sats get up there.
Friday April 30
$26 Million ISP And Private Network Financing
Commitment Received By GTC Telecom
Company Expands Infrastructure To Become Tier One
COSTA MESA, Calif.--(BUSINESS WIRE)--April 30,
1999--GTC Telecom (OTC BB: GTCC - news) Friday announced
that it has entered into a financing arrangement for
$26 million in equipment financing for GTC Telecom's
network. Terms of the agreement were not disclosed.
The financing will be specifically provided for GTC
Telecom's equipment purchases including data communications
and internetworking equipment for GTC Telecom's
``On April 29, 1999, we announced that we
entered into a $100 million strategic alliance to begin
construction on our own network. As a result the company
sought equipment financing to supplement certain
construction aspects. We are extremely pleased to receive this
financing package. The equipment that GTC will be utilizing
is a vital part of the success of our new network.
The network will have the capacity to carry over one
billion minutes of long distance voice traffic, and will
also allow us to become a Tier 1 nationwide ISP,''
stated Paul Sandhu, president and chief executive
officer of GTC Telecom.
``With our low per minute
new network cost, the potential for GTC long distance
revenues are phenomenal. People have been asking us how
GTC can offer such quality services at such
responsible pricing. Yesterday the company unveiled the key
component, and today we are announcing how we are going to
finance our network. Now when you look back at how GTC
revealed our product offerings, it is apparent how it all
fits together,'' stated Eric Clemons, chief operating
officer of GTC Telecom.
``If you follow our
progress, it is apparent that our business is developing on
schedule. In January we offered low long distance rates
that competed with AT&T (NYSE:T - news) and Sprint
(NYSE:FON - news). We announced in January that we were
beginning to set up voice over IP technology which will
compete with companies like IDT Corporation (Nasdaq:IDTC
- news) and Qwest Communications (Nasdaq:QWST -
news). In February we introduced our Wireless T1 service
similar to PSINet (Nasdaq:PSIX - news) and our DSL
service using ADSL technology similar to Aware Inc.
(Nasdaq:AWRE - news) offer. By being an Internet and Telecom
company, GTC combined the two and offers long distance
calling cards for sale online in a rollout modeled after
Amazon.com (Nasdaq:AMZN - news),'' continued Clemons.
The creation of GTC Telecom's private network will
make the company one of the first to have a fully
operational, nationwide, private voice over IP network. This
will allow GTC customers access to toll quality
long-distance service that in the past was virtually
unattainable with Internet Protocol technology. The network is
expected to be completed in Spring 2000.