Again, I want to apologize for the pissing contest I created here.
While I do appreciate the input I highly disagree with some of the language
and attitude here. Can we please stop this thread?
Josh Luthman
Office: 937-552-2340
Direct: 937-552-2343
1100 Wayne St
Suite 1337
Troy, OH 45373
Those who don't understand UNIX are condemned to reinvent it, poorly.
--- Henry Spencer
On Fri, Jan 2, 2009 at 12:12 AM, <[email protected]> wrote:
Travis... I don't "bet" money on non-productive things. IE, I don't
gamble. It's a moral thing.
But, here's why I am saying you're not going to be able to...
1. Over the last 2 decades, industrial finance has been mostly done by
direct sales of bonds on the open market. This has fallen almost 90
percent in the last 6 months.
2. Larger and institutional borrowers have been either delaying
investments, or paying higher rates to float commercial paper. Recent
treasury rates have shown that insitutional investors are willing to pull
money from any business venture and buy bonds instead, at LESS THAN 1%
rate
of return.
3. This has caused the lenders for larger institutions to slow lending.
4. This is going to start cannibalizing the smaller institution's
remaining
capital, as large companies borrow from, or lease from ever smaller
entities, since they're the only ones with any available capital right
now.
Smaller banks and regional banks are still moderately healthy, but with
regulators suddenly breathing down their necks, they're suddenly "risk
averse", to try to keep institutional investors from pulling money out
and
having the regulators start blasting holes in thier portfolios of paper
they
hold as assets. Rules are, that what that paper can be sold for on the
open market, is the value it must be valued at.
A grade paper sells at a steep discount. B sells at a severe discount.
C
or less is is now sold at less than 10% of it's face value. So, even
the
solvent banks are having to start limiting exposure to anything that even
faintly looks "risky".
So, you're likely not dealing with any of those. You're likely using a
company that was capitalized with cash of investors a number of years
ago,
owns its own portfolio of paper, and has relatively limited debt. Yes,
they're calling and saying "we have money to lend". And they do. But it
is
quite limited. Once the larger borrowers arrive in that market, it will
be
sucked up faster than feathers in a hurricane.
Due o the shorter term nature of their lending or financing, you'll see a
small trickle continue.
However, it is also true that the credit standards for even those have
run
upwards a lot, cutting off smaller and non-established prospective
customers
like me and most WISP's. They are raising the finacial requirements of
who
they finance a lot. That's going on considerably and has been for some
time.
Will your lender or leasing co be able to do anything for you in 6
months?
I would not bet the company on it. I absolutely would NOT depend on it
for
the next 18 months. Re-write your business plan. Have a contingency
plan
in place. Have one for no credit being available. That's gone from
"not
thinkable" to "likely" in just 6 months.
That's the wiser "bet", by a million times.
++++++++++++++++++++++++++++++++
<insert witty tagline here>
----- Original Message -----
From: "Travis Johnson" <[email protected]>
To: "WISPA General List" <[email protected]>
Sent: Thursday, January 01, 2009 8:47 PM
Subject: Re: [WISPA] Congress may help smaller ISPs grow
We have been charging the same for internet service for almost 5
years....
and just two days ago, we got double the new sign-ups on a single day
of
what we can do for installs. Business is booming in our area and our
industry. Just looking at our 2008 financials, our gross revenues are
up
15.2% and our Net Profit is up 10.3%.
And I'll take the bet on being able to lease or finance equipment in 6
months. How much shall we throw on the table? I have lease companies
calling me daily wanting to give me money... seriously... I get 3-4
calls
PER WEEK from all different leasing companies. They all have money and
want "credit worthy" companies to use it, because that's how they make
money.
So again, how much shall we bet on this? :)
Travis
Microserv
[email protected] wrote:
++++++++++++++++++++++++++++++++
<insert witty tagline here>
----- Original Message -----
From: "Travis Johnson" <[email protected]>
To: "WISPA General List" <[email protected]>
Sent: Thursday, January 01, 2009 7:24 PM
Subject: Re: [WISPA] Congress may help smaller ISPs grow
You can not grow in large scales without financing... and I don't
understand why people are against it. Our last equipment lease was
under
10% interest, no personal guarantees, no money up front. We were able
to
purchase a large quantity of CPE units (thus saving us about 20% off
the
single unit price). So, in the end, it actually saves money and the
"cost"
of installing a new customer is $0 to you, because the $99 installation
fee pays for the time, materials, etc.
Example:
single CPE = $190 each
460 CPE = $155 each
36 month lease on $71,300 = $2,300 per month x 36 months = $82,800 /
460
units = $180 each
But in 36 months, you might be able to charge no more than 10 dollars /
month per customer. That's the magic of deflation - which is already
occurring.
And it costs you $5 per month for 36 months for the equipment on that
customer... that's pretty cheap even if you only charge $29 per month.
:)
Whatever happens in the future... It will NOT be the same as today.
Inflation or deflation will happen. No way around it. Congress has
already taken on more debt than can be serviced. Neither scenario
will
let you survive being in debt.
Besides, don't expect to be able to lease equipment at any rate or
terms
within 6 months.
Travis
Microserv
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