A LVLT model from thejuice!

May 17th, 2008 by · 5 Comments

Ok, here goes. first, thanks to Rob for allowing me to post information to his blog. Second, in terms of disclosure I'm long LVLT and I don't get anything for posting. This is something I do to help me keep tabs on my expectations vs. actual results. Also, I don't work in the telco industry nor am I holding myself out there as some sort of expert in anyway. I make mistakes all the time, am not embarrassed about it and appreciate feedback to help make corrections and improve the end product. Think of this work as "open source spreadsheeting" where you feel free to improve my work in anyway you see fit, including ignoring it if you think this pos is going to zero. [side bar - there's a new book out by Clay Shirky that talks about how people are organizing around new media channels like this blog as a way to reduce failure, called Here Comes Everybody.] As my initial contribution to this blog

I'm going to post a portion of a spreadsheet I keep as a way for others to:

  1. See what my expectations are per q;
  2. See what the actual results were per q;
  3. Allow you to benchmark me to others (BTW I did much better than most major IB analysts last q); and
  4. Allow you to enter in your own numbers and see the results.

Click here for thejuice's interactive model (requires IE and the Office plugin)

Click here for thejuice's non-interactive model (other browsers and configurations)

Q108: I posted my thoughts re this past q on post 55038 on the LVLT board on Investor Village. I frequent this board, along with Rob and a bunch of other folks that I know personally. It's a fun place with some real characters. You will have to use the ignore feature as some people, for whatever reason, feel the need to treat this as a place to gloat about the misfortune of the long trade; but for the most part its a great board and has lots of smart people.

Q208: As to my expectations for the upcoming q, I have run the numbers after reading the 10q and digesting some industry data and come out around 235m in ebitdas and free cash flow [fcf] loss of 54m or a cash net gain of 75m if you expect Vvyx to close. In terms of the big issues: on the revenue side we need to grow CNS, which I model @ 2% growth while also maintaining around 25m in WVS growth above the 150m base. In regards to COGS, I'd like to see this number come down a bit as a percentage of communications revs as it seems we are trending up which tells me we are bringing on more traffic that's off-net. For SGA, the real stunner in q1, I'd like to see this fall to 385m which is the current base without one-time adjustments. Since we will have layoffs for the near future we are going to keep having "one-time charges" but I think the base should fall. I've also heard there are lots of efforts to keep SGA down, something we were not always focused on in the past. So that puts us to 235m in ebitdas. BTW, I add an "s" at the end of ebitda because we don't include stock based comp in the calculation a fact that should never be forgotten. In terms of below the ebitdas line, I think interest, net is a bit lower this q and capex should be up a bit from q1, but that's a guess. As to "other" my little slush account for working cap and other changes, I have negative 47m from an operational standpoint. I cannot justify this number in any way except to say that this is my guess based on looking at previous years and factoring in certain changes in the business. This line of thinking puts us around negative 54m in fcf for the q a result that should be taken positively by the street or if you net out the 129m if Vvyx closes you end up at 75M cash, net gain, assuming no working capital adjustments.

I'll update this spreadsheet once the numbers come in and will keep doing so quarterly also; Rob and I have talked about me posting some telco regulatory stuff, a subject I have some passion/knowledge about. That's something for the future.

PS: In order for you to enter in numbers and see your expected result, as well as see how your numbers stack up against mine, simply enter your numbers into the yellow boxes (don't forget the negative signs when needed). The spreadsheet will do the computations for you, so only put numbers in the yellow boxes!

PSS: Finally, and I've thought quite a bit about this as Rob has come out from behind the curtain regarding who he is, his real name etc, I'm going to also. For those that ever send me private messages and email I always respond with my real name so for many folks it's no secret. I know there are many that really value the privacy their handles afford, but for me it's not that big of a deal. So, hello, my name is Jeremy Drane and I'm a LVLT addict.

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5 Comments So Far


  • skibare says:

    very nice way of “”””Openning Up””” the universe and you and Robs work is ALOT better than most high paid Wharton idiots!!! Keep up the Great Work Toes

    skibare

  • thejuice says:

    please note the gross margin [gm] assumptions built into the spreadsheet are as follows:

    cns growth = 80% gm
    wvs growth = 30% gm
    termination = 100% gm
    other = 80% gm
    sbc = 37% gm

  • mcdab says:

    Juice, you generously shared your spreadsheet with me many months ago and I have kept it updated – couldn’t recommend it more highly.

  • The_highwayman says:

    Juice,
    I am with Mcdab, you shared this with months ago…thanks for all you do!

  • louis Inclarq says:

    You guys are awesome!

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