RECOGNIZING HIDDEN VALUE

Bob Dawson,

Southern LINC

A key issue for holding companies seeking growth through diversification is getting stock analysts to pay an appropriate amount of attention to their unregulated investments.

“Right now it gets lost and doesn`t get recognized,” said Bob Dawson, president and CEO of Southern LINC, a Southern Co. subsidiary. Southern LINC developed a radio-frequency, wireless communications network that serves more than 150,000 subscribers in a 127,000 square-mile region of the southeastern United States.

“Southern has invested more than $200 million in Southern LINC. That sounds like a lot, but it`s not much in the overall Southern Co. perspective. We don`t get the same valuation that other, stand-alone carriers get,” Dawson said. “If you diversify and have money tied up, it can be a negative valuation on your stock, because the analysts don`t know how to value it and it might not be big enough to warrant a lot of attention.”

Montana Power faces the same problem, but for the opposite reason. “Wireless and fiber network activities have overwhelmed the value of the company,” said Bob Gannon, Montana Power`s chairman, president and CEO. “We`re looking at alternatives. If in fact we have a hidden value in our telecom activities because of its submersion in the Montana Power Co., we need to do what we can to allow that hidden value to be recognized in the marketplace.”

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