Here is my updated Level 3 Communications (LVLT) model with projections for Q4 and onward into 2009 and 2010. As with recent spreadsheets, this one is stored on Google Documents. I have included a summary page for Q4 and full year 2008 projections, but if you really want to see the details or further projections then you can delve into to the other sheets. I have tried to take a slowdown due to the economy into consideration, but of course who can tell.
To play with the whole thing, try this link to the excel spreadsheet.
To make a long story short, I project Q4 core revenues of $985M, with total communications revenues of $1066. EBITDA of $272 seems very reasonable to achieve, and earnings per share of $-0.10 include the known debt/equity swaps in early October. Comparing with thejuice, I have core revenue coming in lighter than his $993, which accounts for most of the variance in EBITDA from his $279. Mostly this is just a guess about how much the economy will hurt growth in Q4 and on.
I expect Business Markets to continue to struggle, while Wholesale Markets should show a little life. Content Markets should have a nice Q4 on the back of Vyvx’s seasonal boost plus increasing CDN relevance. Europe will grow solidly as usual, but this division seems to face a continuing currency headwind so I don’t expect that much. Cash SG&A will drop below $360M, and gross margins probably will pull back after a strong Q3 – Murphy’s law and all that.
My model is complex, probably much more complex than it needs to be for almost anyone else looking at it. But I prefer it that way, it lets me keep track of more threads than I otherwise would. For instance, I can look at the effects of differing growth rates across product lines on gross margins, and the historical effects of working capital swings. Anyway, I find it useful.
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