future transit prices

Fri Oct 18 22:18:08 UTC 2002

> How do you compute CGS on a network that is 25% utilized?

"bad"

> Is it expenses/current utilization or expenses/maximum capacity?

i want to be in a situation where i owe income taxes.  so it's all
about costs vs. sales.

> I think a lot of the low-ball pricing that is in the market is the
> result of networks selling off underutilized capacity at discounted
> pricing just to get some additional cash flow.

in other words, people don't know what their costs are, so any sales
are good.  this is one of the situations that can't last.

> This pricing probably doesn't take into account the necessary capex
> that will be required to upgrade the network when it approaches
> saturation.

actually it assumes that equity funding will be available for step
functions in capacity as long as the underlying business is returning
high single digit NPM.  (that's how large-capex commodity plays work,
since share price will be a function of P:E.)