Thursday, December 09, 2004


Congratulations to any of you that took my recommendation to buy NXTL at $2.90 per share. As of today, you have a 10 bagger. My family bought too early at $3.90 per share. Our return of 745% in 2.5 years is not bad. We bought more shares later at around $9.00.

FON is up again today and reporters have confirmed that NXTL and FON are in merger talks. The merged companies gain in several ways. They both own 2.5mz spectrum that is suitable for high speed data. NXTL has tested and re-tested Flarion Technology but will likely go with CDMA--QCOM's standard service. The key to big profits for the wireless firms is to drive down costs. Subscribers do not expect their phone bill to go down dramatically. The merged companies can lower costs significantly. The big question; who will run the combined company? Both companies have highly respected management teams.

The deal will likely be a non-taxable stock swap. FON has a slightly higher market cap than NXTL but the word is that NXTL initiated the talks. It has been widely reported that NXTL was about to buy AWE before Cingular jumped. The push to talk technology owned by NXTL could help continue the merged companies advance in the prime business market. Sprint too has been pushing to be the provider of choice for businesses. The market clearly likes the combination as both stocks are trading up. I most recently purchased FON but have owned NXTL for 2.5 years. If you do not own, you probably should buy FON.