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We preempt Fool's Gold this weekend to run a front-screen correction on some inaccuracies that appeared earlier in the week in the Motley Fool's LunchTime News. Earlier this week you saw two stories on CAI Wireless <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CAWS)") else Response.Write("(NASDAQ:CAWS)") end if %> run in this space, one on Tuesday morning and one on Wednesday morning. Detailed below are two errors from those stories, largely brought to our attention by our readers.
(1) The first error was a misstatement about whether or not the funding from the BANX Partnership---Bell Atlantic and NYNEX's venture capital division---had come through. I said it had not come through and it had. BANX paid CAI Wirless $30 million in May of 1995 and $70 million in December of 1995 for convertible debentures (bonds), preferred stock, and warrants.
(2) The second error made is the one that actually caused the first incorrect assumption. The second error was looking at the March 1995 balance sheet as opposed to the December 1995 balance sheet when looking at CAI Wireless's liquidity, an crucial fact when establishing fundamental value. In December, CAI Wireless had a significantly better cash position than in March, which is why this error actually is the more important of the two, in my mind. The reason why I actually assumed BANX had not come through is the company was not showing any cash... but a correct look at the balance sheet shows it had plenty of cash.
The balance sheet as of December 31, 1995 shows cash at $120 million and about $2.5 million in other liquid assets. The rest is in property and equipment ($69 million), "right" ($204 million), debt service escrow ($91 million committed to current debt holders) and goodwill ($176 million that must be amortized off the book). Of this, the $123 million is liquid assets that can be used to build out the above mentioned network.
My apologies again.
There has been a lot of speculation as to why my mistakes occurred or what they cost shareholders. In the end, however, Fools need to make up their own minds about this and about the value of the company. I continue to believe that the company represents significant risk to individual investors, but that is not what this article is about. This article is about corrected incorrect information, apologizing to both shareholders and the company for broadcasting incorrect information, and trying to get the truth out.
The News staff here at the Fool sincerely regrets any incorrect information and we in no way sought to harm traders or profit from it. The errors were errors and in the final analysis the new information does not change the previously stated opinions.
Feel free to e-mail me directly or post to the CAI Wireless board if you have any further questions or points to make about this subject, or to see what I think about CAI Wireless given the corrected information. I urge Fools to remember that one of the strengths of the online medium is that we can and will issue corrections immediately, and that we can build out our research and valuation models through interaction. DIRECTLY TO ANY INTERNET E-MAIL BOX. CLICK HERE TO FIND OUT MORE ~ | ||||||||
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