Colt - 2005 New Year, New Highs.............

drewz

copied from sunday times

SHAREHOLDERS in Colt Telecom need to ask themselves whether they are feeling lucky. (Although if they’ve owned the shares for a while, they will already know the answer — no.) The one-time star of the alternative-carrier sector is in a bind. About 60% of its now-stagnating business comes from switched voice traffic. That revenue is extremely vulnerable as the telecoms industry starts the move to next-generation networks based on internet protocol (IP).

Much of Colt’s early success was based on winning large corporate customers in the City of London. Just the sort of sophisticated firms that will be in the vanguard of the move to IP. Gulp. What makes things worse is that Colt has a lot of debt it needs to refinance. This could become a lot more difficult if the sudden loss of a large contract wrecks its quarterly figures.

The loss-making company is finally about to become cashflow positive. However, the risks it is running are greater than they seem.

I think the writer of this article needs to do his homework