Long-distance phone company looks like takeover candidate, brokerage report says.Long-distance phone company looks like takeover candidate, brokerage report says Despite hefty losses, Van Nuys-based Com Systems Inc., the largest regional long-distance telephone company on the West Coast, is a good takeover play on Wall Street, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a report issued recently by Stratton Oakmont Inc., a Lake Success, N.Y.-based brokerage that specializes in high-risk, high-return stocks. Com Systems is a regional version of the major, independent long-distance companies, such as Sprint or MCI (1) (Media Control Interface) A high-level programming interface from Microsoft and IBM for controlling multimedia devices. It provides commands and functions to open, play and close the device. (2) (Microwave Communications Inc. . Com Systems reported a loss of $11.2 million in 1989 on revenues of $97.4 million. But the losses were incurred by a Com Systems venture into the coin-operated public phone market, and the venture should improve its connection soon, said Robert Grossman Robert Grossman (born March 1, 1940 in New York City) is an American painter, sculptor, filmmaker, and author. His illustrations have appeared over 500 times on the covers of various national publications. , Stratton Oakmont analyst. "Com Systems realized it would sustain large losses from its decision to pursue the coin-operated public phone market this past spring. Most of the losses were related to out-of-control fraud expenses (bad debts, code abuse and other fraud) which exceeded 50 percent of revenues last summer and are currently running well under 25 percent," he said. Despite that poor showing, "When the dust clears, Com Systems winds up with a $55 million business at a net cost of about $10 million. . . .The fraud is generally being contained and the company will earn $1 million operationally (before interest expenses) in the first half of 1990." Overall earnings should improve at Com Systems in the 1990s, said Grossman. "By 1991, we expect Com Systems revenues in excess of $180 million, or $10 per share, and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , before interest and taxes, of $20 million, or $1.10 a share," wrote Grossmann. Then the company will be ripe for a takeover by one of the major long-distance carriers in the next 18 months, said Grossmann. The Dutch merchant bank Omni Holdings controls nearly 60 percent of the fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares of Com Systems, wrote Grossmann. Grossmann disclosed in his report that he is a limited partner in Com Systems Network II, of which Com Systems is a general partner, and that, as an investment banker Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. , he has participated in a Com Systems private placement of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . |
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