Go to Jeff Salisbury LWGate Home Page.From: "Jay Cliburn" <jay@hobo.idec.sdl.usu.edu>
Subject: Re: [CANSLIM] WCOM
Date: Wed, 10 Sep 1997 10:56:45 -0600
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Joy, I have a special interest in WorldCom, inasmuch as it is one of the very few large corporations with headquarters in my home state of Mississippi. It is the ONLY Fortune 500 company headquartered in Mississippi. As a result, I follow its doings fairly closely. I do not own any of its stock. The following numbers come from Daily Graphs and IBD. WCOM has an excessively large float -- by CANSLIM standards anyway -- of 883.8 million shares. Funds and banks own a combined 34% of it. RS is 80. EPS is 4. Annual EPS have been choppy: 1991 0.20 1992 -0.02 1993 0.41 1994 -0.48 1995 0.64 1996 1.02 Quarterly EPS have likewise been unstable: 09/30/96 0.27 v 0.18 +50% 12/31/96 0.29 v 0.16 +81% 03/31/97 0.05 v 0.21 -76% 06/30/97 0.08 v 0.25 -68% Much of WCOM's earnings variation is related to acquitision costs. As you well know, WCOM announced a deal Monday whereby it intends to acquire Compuserve's and AOL's network infrastructure, among other things, for approximately $1.2B. Investors have reacted favorably to this news. In a larger sense, the company has been on an acquisition binge of late. Back in 94 (I think), it acquired WilTel. Last year it acquired MFS (who had recently acquired UUnet). There have been other acquisitions as well, but the WilTel/MFS/UUnet/AOL/Compuserve deals are the most notable. These most recent acquisitions are clear evidence that the company wishes to accomplish two main goals: 1. Establish a stronger foothold in local phone markets. 2. Establish a dominant position in the internet infrastructure arena. Uncertainty in the telecom industry surrounding the final implementation of the Telecommunications Act of 1996 should weigh heavily in your investment decision. Watch closely for news and court decisions related to the Act. My take on WCOM is that it'd be a good long-term play, but it really isn't a typical CANSLIM candidate. Hope this helps. Regards, - -- Jay Cliburn | Space Dynamics Laboratory Computational Sciences Division | 1747 North Research Park Way Jay.Cliburn@sdl.usu.edu | Logan, Utah, USA 84341 (801) 755-4317 (voice) | (801) 755-4366 (fax) New telephone numbers effective 22 September 1997 (435) 797-4317 (voice) (435) 797-4366 (fax)
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