24/7 Wall St. » Richard Branson

Virgin Media Almost Half of Old Buyout Price (VMED, NWS, CMCSA)

247wallst — Mon, 07 Jan 2008 13:11:07 +0000

Can you recall at the start of 2006 when Virgin Media, Inc. (NASDAQ:VMED) was deemed as in-play as a buyout candidate and then later in 2006 when it looked like a buyout might occur in the $27 to $30 stock price range? This is the broadband and content company that operates in the United Kingdom. If you want to go way back in time, it used to be NTL and traded under the NTLI ticker; and the old Telewest is part of it. It also offers mobile and IP phone services.

In early January 2007 before this changed to Virgin Media, this was Jim Cramer’s #5 Foreign Pick at the time. It was noted that Virgin owned 10% and he like many others noted that the past $27.00 bid from private equity in the past had been rejected. At that point the shares had seen a 52-week high of about $31.00 and its market cap was over $8.5 Billion.

Shares are down over 5% today at a new 52-week low of $14.86. Virgin Media’s 52-week trading range is $15.39 to $30.00 and the market cap at current prices is under $5 Billion. A couple more days like this and shares will be at half of the old buyout price.

Sure, there has been client turnover, added competition, and the company even had content carrying problems with some key content partners. It has seen some changes in the board. Regulators want BSkyB to cut its stake in commercial broadcaster ITV, which means that Virgin Media may get to after it again in a bidding. BSkyB is roughly 39% controlled by News Corp. (NYSE: NWS).

In its November earnings report, Virgin Media narrowed losses by 36% to 61 million pounds ($127+ million at the time) but revenues were down 1.8% on a 13,000 subscriber add to roughly 4.8 million. It looks like the company had lost almost 120,000 subscribers in the two quarters before.

On a dollar translated basis, it looks like its books are inverted and leveraged like many of the old cable companies inside the U.S. used to be. With almost $16 Billion in liabilities and a slightly negative tangible book value you can see the leverage.

It seems this has a lot stacked against it. We don’t think that with the high debt levels that a private equity firm will go pursue this one with any vengeance. But we’d also expect somewhat of a floor to come into play if this trades down under $13 or $14 per share as long as the company doesn’t fall into an "at-risk" status.

Comcast (NASDAQ:CMCSA) recently was hitting 52-week lows as well and News Corp. (NYSE: NWS) is well off its highs too. So it isn’t alone. The truth is that someone has to own the content and the delivery platforms. These don’t stay down and forever, but calling an exact bottom in today’s market would honestly be more guesswork on potential capitulation than it would be omniscient.

Jon C. Ogg
January 7, 2008

Virgin Mobile’s First Analyst Call…A Sell (VM, S)

247wallst — Thu, 18 Oct 2007 08:09:31 +0000

Virgin Mobile USA (NYSE:), Richard Branson’s recent pay as you go cellular carrier IPO, managed to pick up its first analyst coverage today. Stanford Group Company was not in the underwriting syndicate, but the boutique is the first brokerage to initiate coverage. It issued a "Sell" rating. A call into Stanford confirmed the coverage, and a director of equity research confirmed that analyst Michael Nelson picked up coverage as a Sell rating with a $10.00 target.

The underwriter quiet period has not yet ended, so the analysts that got a closer look into the company are still a few weeks out from being able to issue their research calls. We won’t see these notes from underwriters until November. The book runners in the underwriting were Lehman, Merrill Lynch, and Bear Stearns; and co-managers were Raymond James and Thomas Weisel.

Virgin’s carrier partner Sprint Nextel (NYSE:S) has also been in the soup lately. Shares are indicated about 1% lower today, but they are down about 10% since the IPO.

Jon C. Ogg
October 18, 2007

Virgin Mobile IPO Debut (VM, S)

247wallst — Thu, 11 Oct 2007 08:32:06 +0000

Virgin Mobile USA (NYSE:VM) has raised $412.5 million after it priced its IPO of 27.5 million shares at $15.00 per share. 25.467 million shares are being sold by the company and the small remainder by holders; underwriters have a 4.125 million share over-allotment option. The lead underwriter and book runner is Lehman Brothers, and joint book-runners were Merrill Lynch and Bear Stearns. Here was our original coverage of the IPO at the filing date.

We recently noted that the terms were being set at $15.00 to $17.00, so some may deem this as a conservative pricing for billionaire Richard Branson’s wireless telecom venture that uses the Sprint Nextel (NYSE:S) network. Shares should open for trading shortly after the open and original range estimates were pretty wide at $15.50 to $18.50, assuming those are accurate indications.

As of June 30, 2007, Virgin claimed 4.83 million customers. Revenues and net loss for the year ended December 31, 2006 were approximately $1.1 Billion and -$36.7 million; Revenues and net income for the six months ended June 30, 2007 were approximately $666.9 million and $26.5 million, respectively. As of June 30, 2007 and December 31, 2006, members’ accumulated deficit was approximately $(614.4) million and $(643.9) million, respectively.

Jon C. Ogg
October 11, 2007

Virgin Mobile Sets IPO Terms (VM, S)

247wallst — Tue, 25 Sep 2007 08:47:26 +0000

The awaited IPO of Virgin Mobile is much closer to coming out. The company has set terms at 27.5 million shares, with 25.55+ million coming from the company itself. Virgin Mobile has taken the proposed ticker of "VM" on NYSE and the proposed pricing range is set at $15.00 to $17.00 per share. The underwriters are listed as Lehman Brothers, Merrill Lynch, and Bear Stearns; and co-managers are listed as Raymond James and Thomas Weisel Partners.

If you aren’t familiar with Virgin, this is U.K. Billionaire Richard Branson’s pay as you go mobile telephone network in the U.S. that was launched as joint venture with Sprint Nextel (NYSE:S).

Here was our original coverage on Virgin Mobile. Other recent IPO Filing coverage:

Jon C. Ogg
September 25, 2007