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mariuz · 07-12-2002, 09:22 PM

From Light Reading Yesterday:

Margalit [back to the notebook]: Finally, with service providers, we do believe something good will come out of all this shakeup. When something is dying, it's hard to call it healthy. But in a long-term perspective it will be healthy. These companies have real assets, but the capital structure ? the debt, versus equity versus this versus that ? and the business structure ? that of trying to be all things to all people ? that's just not going to hold.

So with companies like Cogent Communications Inc., you want to think, in an industry that will finally get back to sanity, it has a chance at coming back and providing an alternative to incumbents in that area where they have been the weakest ? data services.

Light Reading: Speaking of insanity and Cogent, most everyone we talk to doesn't get it at all ? they have this huge amount of debt.

Margalit: I don't think so. Cogent has, like $100 million in the bank; they have a major arrangement with Cisco.

Light Reading: They have a bunch of vendor financing.

Margalit: But in a way that makes a lot of sense in terms of implementing the network. Cogent is addressing that last part of the last mile ? connecting the buildings to the network. Once you're in the building, you get customers. The issue is getting into the building. We're seeing how difficult that is. But we're getting it done.

And they have the lowest operating cost of a network. Any network that we load onto our network ? the amount of savings that we have because of the ingenuity of our network is unbelievable. A lot of the cost for carriers is just maintenance of, and overhead of, running the network. It's amazing how much cheaper running a pure data network over Ethernet really is. We need to build up the revenue and utilize ? besides the end users in the buildings ? we need to really utilize our network.

After buying PSINet Inc., we have probably the second-best peering agreement in the U.S. It's very healthy from a financial point of view. Cogent is going to be EBITDA positive in 2003. The devil's in the details. But it's a very healthy model.

A lot of people say, you did a reverse merger and you bought Allied Riser, and is it really worth it? We have a public stock, but we all hold preferred stock. That was just the vehicle to get ahold of some major assets. We're not building up so that the stock price can, all of a sudden, shoot up. We have a different strategy. When you have like 3 percent of the company on float, it's still like a private company. We're managing this company for 2003 and 2004. That's when we think it will have scale and profitability. We think that right now is the time to build out and gather assets and get revenues.

07-12-2002, 09:22 PM
mariuz Confirmed User Join Date: Aug 2001 Posts: 134	From Light Reading Yesterday: Margalit [back to the notebook]: Finally, with service providers, we do believe something good will come out of all this shakeup. When something is dying, it's hard to call it healthy. But in a long-term perspective it will be healthy. These companies have real assets, but the capital structure ? the debt, versus equity versus this versus that ? and the business structure ? that of trying to be all things to all people ? that's just not going to hold. So with companies like Cogent Communications Inc., you want to think, in an industry that will finally get back to sanity, it has a chance at coming back and providing an alternative to incumbents in that area where they have been the weakest ? data services. Light Reading: Speaking of insanity and Cogent, most everyone we talk to doesn't get it at all ? they have this huge amount of debt. Margalit: I don't think so. Cogent has, like $100 million in the bank; they have a major arrangement with Cisco. Light Reading: They have a bunch of vendor financing. Margalit: But in a way that makes a lot of sense in terms of implementing the network. Cogent is addressing that last part of the last mile ? connecting the buildings to the network. Once you're in the building, you get customers. The issue is getting into the building. We're seeing how difficult that is. But we're getting it done. And they have the lowest operating cost of a network. Any network that we load onto our network ? the amount of savings that we have because of the ingenuity of our network is unbelievable. A lot of the cost for carriers is just maintenance of, and overhead of, running the network. It's amazing how much cheaper running a pure data network over Ethernet really is. We need to build up the revenue and utilize ? besides the end users in the buildings ? we need to really utilize our network. After buying PSINet Inc., we have probably the second-best peering agreement in the U.S. It's very healthy from a financial point of view. Cogent is going to be EBITDA positive in 2003. The devil's in the details. But it's a very healthy model. A lot of people say, you did a reverse merger and you bought Allied Riser, and is it really worth it? We have a public stock, but we all hold preferred stock. That was just the vehicle to get ahold of some major assets. We're not building up so that the stock price can, all of a sudden, shoot up. We have a different strategy. When you have like 3 percent of the company on float, it's still like a private company. We're managing this company for 2003 and 2004. That's when we think it will have scale and profitability. We think that right now is the time to build out and gather assets and get revenues.