Charlie Bottle

Capitally Challenged Stocks That Could Be Diluted or Extinguished

Good artcile. SBC Communications is a powder kegg, it has been around for 10 years and is yet to produce a profit. Very risky stock and extremly overvalued (earnings would need to grow at vey fast rates to justify current valuation that has not really happened in the past and will not happen now for sure - any growth is capital intensive and capital is much more expensive). Substancial debt coming due in 2010 will require a lot of dillutive capital to get the capital structure back to any level of reasonableness. Take a look at my article.

seekingalpha.com/artic...

JP Morgan Initiates Coverage on Wireless Tower Companies

Unbelievable that JP morgan is bullish on SBAC based on trading at a 7X 2010 earnings?

SBAC is trading at an astonomical 14X TTM EBITDA. TTM EPS is -0.31 (a loss). This company has been public for 10 years and has never turned a dime in profits.

This is eally just an over valued and overleveraged real estate business with 90% debt and 10% equity and dent of over 7 X EBITDA.

This business has been built on financial engeneering to take advantage of lender and investor gullability and is coming to a griding halt. When SBAC goes to refinance its debt in 2010 (like AMT has done this year) there will be no CMBS market to shove this paper on, if it manages to roll all of the debt (which is doutful) its financial costs will double taking it deeper into the red, we'll see what the 2011 profits look like then.