RIDING THE Telecom PHENOM - stocks to be considered

Kiplinger's Personal Finance Magazine, Sept, 1999 by Manuel Schiffres, Ian Baldwin

Primus's management, analysts say, is well equipped to take advantage of the substantial growth opportunities that are available in the international long-distance arena. Led by its co-founder, K. Paul Singh, who has roots in both MCI Communications (now part of MCI WorldCom) and Comsat, management "has an incredibly strong background," says John Seabern, co-manager of Robertson Stephens Diversified Growth fund. He notes that only 40% of Primus's long-distance traffic is running over its own network, but as the company adds more of its own facilities, "that will provide a lot of profit-margin expansion and humongous cash-flow opportunities."

As with most other young telecom-service companies, Primus is not currently profitable, though analysts expect positive cash flow this year. Still, many observers think the stock is cheap, given that revenues are expected to hit an annual $1 billion by the end of this year and the stock's market value is only $600 million. Danny Zito, an analyst at Legg Mason Wood Walker, values the stock at $30 a share today.

Reporter: James Ramage