Ok, I had a call with IR and had a chance to ask many questions. Consequently I have updated my model. For those that follow this ongoing effort you will note that I have brought down my EBITDA number. Here is the spreadsheet:
On this I would point out a few mistakes I made in the last version and whose corrections are reflected in my new projections:
- SGA falls in Q4 NOT Q3 (when pricing for ulitity bills etc comes down)
- Increases in GM on CNS base will be a function of when we shut down the legacy networks, something that will happen in 09 not 08. Of course we might see a small increase, I'm going to assume <1% for the remaning portion of the year, but until we shut down Broadwing etc. we are going to be stuck around 65% GM. The low hanging fruit is done, going from 63% to 65% from Q1 to Q2....at this point we will need to wait up to a year before we see the bigger benefit associated with the final stages of the integration process.
- My thought is that we will grow CNS 3% in Q3 and 4% in Q4. I *really* think we need to make this happen so that we can start to talk about double digit growth in CNS for FY09.
I won't be updating anymore until a few days before Q3 numbers come out in late October. Until then, best of luck to all.
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