Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0

I've been running my ruler over RCN again, thinking of adding to a small holding - prompted by the Tweedy Browne filing of about 5% ownership.

Obviously at book value for investments and the preferreds, the common doesn't look prtty; a little better if you factor the Vulcan $1.6b of pref's as equity (treating the Vulcan as having a convert of around $50 - to allow for the 7% stock dividend which the common won't get - so about $150M shares out) I get a notional book of about $5 a share.
Obviously as the Vulcan preferreds have a par liquidation preference (ie at $1.6b + divs) this won't play out in liquidation.

What I'm puzzling over at the moment is the asset side of the balance sheet. For some reason I have the figure of cable subscribers going at $1,000 ea. in transactions. At 1.2m subscribers (? I'm sure there's not just tv in here I know) that'd give assets of a billion or so meaning that they've paid too much - yet I thought this way was going to be cheaper - even factoring in a doubling in connections, and the 4!b in 'cash' this doesn't get us to the $4b in assets.

My key question here I suppose is
Is $1,000 per subscriber a reasonable sale value for a cable business?

peter xyz
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.