Telecom Ramblings

CenturyTel (CTL) is buying Embarq (EQ).  Apparently the M&A market in telecom isn’t quite dead!  In this case though, it’s a bit odd to think about CTL as the buyer since it is the smaller of the two.  Embarq’s revenue hovers at $6.3B, whereas CenturyTel is in the $2.6B range.  Indeed, CenturyTel shareholders would own only 35% of the combined company if the merger does in fact happen. [Read more →]

Two weeks ago, I looked at the new valuations of nextgen facilities-based telecoms, and it seemed that the markets had decided on an enterprise value to EBITDA ratio of roughly 5-6.  Well, the market apparently wasn’t done.  While only LVLT has reported, the market has continued to devalue the sector indiscriminately.  So let’s take a look at [Read more →]

Hosting specialist Rackspace (RAX) made a move on the cloud space this week.  And it wasn’t a feint, it was a pretty substantial step.  Rackspace bought two cloud-based companies, Slicehost and Jungle Disk, and established partnerships with Limelight and Sonian.  There was quite a bit of talk on the subject in the blogosphere, but what [Read more →]

Level 3 Communications (LVLT) reported earnings this morning, with mixed results.  Communications EBITDA was $257M, above the expectations of many, a feat accomplished with continued impressive cost savings.  Good thing too, because revenue growth continued to lag a bit, with total revenues of $1.070B, and core revenues of $964M.  Free cash flow was $-4M, or basically neutral.  Comparing with my estimates in yesterday’s primer, I wasn’t too far off. [Read more →]

Datacenter specialist Equinix (EQIX) reported earnings today, and the results were as muscular as past quarters.  Comparing with guidance as discussed in my earnings preview post the other day, revenues were solid at $183.7M and EBITDA exceeded guidance at $77M.  Gross margins of 62% and EPS of 0.19 were both good numbers as well.  Full year projections were narrowed within the current ranges.  Capex was [Read more →]

That’s what the media is reporting this morning.  That’s what this economic crisis has done to our minds.  AT&T reported earnings this morning, and they apparently missed on the profit number because iPhone sales – which are subsidized – were substantially higher than expected, and the headlines of course focus on the miss.  Does the market really believe that [Read more →]

Level 3 Communications (LVLT) reports earnings Thursday morning, the first US nextgen carrier to do so.  And when they do, the first thing everyone is going to look for is evidence of economic deterioration.  LVLT’s business has many units and their earnings reports can be rather [Read more →]

Telecom equipment provider Infinera (INFN) reported earnings this afternoon, beating estimates.  Adjusted GAAP revenue of $80.9M was above the range of $75-80M given in Q3 guidance.  Gross margins of 42% were on the low end due to one time effects from their rollout at Deutsche Telecom, where a migration from legacy DWDM to PICs is now complete.  Infinera added 5 new customers in addition to DT and began shipping their ILS2 systems in August.  And what about the effects of the economy? [Read more →]

On Wednesday after the market closes, datacenter provider Equinix (EQIX) will report earnings and once again will give us an initial look at the rest of the sector.  If you recall, last quarter Equinix had one of the strongest quarters in the internet infrastructure sector, beating estimates handily and increasing its 2008 guidance.  Indeed, the colocation space has been on a tear all year, with most participants being well funded and engaging in massive buildouts to meet a raging [Read more →]

Upstart telecom equipment provider Infinera (INFN) reports earnings Tuesday after the market closes, so let’s size up the situation a bit beforehand.  Back in June, Infinera pre-announced a Q2 shortfall and reduced its Q3 and FY08 guidance.  The company attributed the lowered expectations to reduced demand from carriers who were slowing buildouts, an event that now might belatedly be considered [Read more →]

Swedish network provider Ericsson reported earnings this morning, they had been expected to release earnings on Friday but apparently decided the good news just couldn’t wait and checked in with revenues of SEK 49.2B.  Their earnings of SEK 2.8B included a large SEK 2B restructuring charge, but substantially [Read more →]

On Friday I speculated that Carl Icahn might be planning a ‘short form merger’ for network operator XO Communications (XOHO), as he increases his holdings to near 90%.  However, it turns out that this threshold is not as interesting as it might have otherwise been.  Back in late July, when Icahn refinanced XO’s senior debt with all that convertible preferred and perpetual preferred stock, buried in the agreement was [Read more →]

Back in the bubble, longhaul fiber was a darling of the street.  These days, the value of metro fiber gets most of the press.  But regional fiber is a middle child that gets overlooked.  If a market isn’t conveniently on the route between two NFL cities, the number of on-ramps drops amazingly quickly, the alternatives to the ILEC are generally few and come from brand names that don’t get heard much.  In technological terms, this fiber is akin to longhaul fiber because it covers distances greater than a metro loop would and uses basically the same gear.  But in terms of functionality, it often acts more like [Read more →]

First we had Google (GOOG) filing a patent on datacenter barges floating 3-7 miles off shore, and now we have Morgan Stanley planning a tidal power based datacenter in the far north of Scotland.  The idea of course has a familiar ring nowadays:  instead of bringing the power to the datacenter, why not bring the datacenter to the power?  And you have to hand it to the [Read more →]

In a filing yesterday with the SEC, Carl Icahn increased his ownership of network operator XO in a private transaction, adding 3,995,000 common shares and 500,000 series A preferred shares to his holdings.  Billionaire buys a few more shares during a panic, that’s not much of a headline perhaps – except that Icahn appears to be approaching the 90% threshold.  If he reaches it, it may enable him “to execute a short form merger to eliminate [Read more →]

Tata Communications announced today the first commercial rollout of Cisco’s telepresence application.  They now have pay-per-use public rooms in hotels in the US and UK as well as in Mumbai, Bangalore, and Chennai over in India, and are planning to make 100 such rooms available globally by the end of 2009.  So any of us who have need of this bandwidth burning, lifelike videoconferencing app, and either the money to pay for it or an [Read more →]

Today Level 3 Communications (LVLT) filed an 8-K with the SEC detailing a series of swaps of equity for various issues of its convertible debt.  With $362M due in September of 2009 and $903M due in 2010, the worry has been that if this credit crisis continues too long they will have trouble refinancing.  The overriding question is, by doing these deals, have they improved their situation? [Read more →]

At its annual meeting this week, Internet2 and several partners will demo hi-def videoconferencing over Dynamic Circuit Networks, or DCN.  The 1080i video stream will be uncompressed and will clock in at around 1.2Gbps.   They will be connecting students in the Large Hadron Collider (LHC) in France with [Read more →]

Optimum Lightpath, the metro fiber arm of Cablevision, announced today that it has passed the 3000 lit building threshold, on 3200 route miles of metro fiber in the New York City metropolitan area.  That is far and away the most for any CLEC in any market in the USA.  This statistic is helped of course by the fact [Read more →]

When earnings season begins in earnest next week, we’re going to hear CEOs and CFOs through the internet and telecom sectors expressing the same basic attitude in a myriad different ways.  That attitude is one of severe caution.  After all, we have watched a forest fire burn through [Read more →]

The Northern Tier Network Consortium has selected Infinera’s PIC to light its fiber.  Who is the NTNC you ask?  Well so did I, but apparently it is a newly forming research network.  The idea it seems is to fill in the gap between Internet2, which takes the central route from Chicago to Seattle, and the non-profit CANARIE CAnet-4 network which runs east-west in Canada.  Here is their planned network map: [Read more →]

In times like these, it’s easy to develop tunnel vision as we watch telecom stocks spiral downward.  So let’s step back and see where valuations are now for  USA based, non-ILEC, longhaul and metro fiber providers.  I have compiled a quick list and calculated estimates of their current valuation based on Q2 cash and debt levels plus any known major changes since then (e.g. for XOHO).  Where available, I used [Read more →]

Well, if you read this blog much, you know my opinion.  What I’d like to know is yours.  Do you think the internet infrastructure sector is more resilient than Wall Street is giving them credit for?  Is there anything likely to be said during Q3 earnings calls over the next few weeks that will be as terrifying as last week’s market plunge implies?  Are sales about to drop off a cliff?  Or are we just

[Read more →]