Global Crossing Earnings Primer for Q1/2009

May 4th, 2009 by · Leave a Comment

glbc reports earnings after the bell today, so lets look at a quick preview of what we might see.  The way I see it, there are competing trends.  On the positive side, Global Crossing has shown increasing vigor over the past year, with solid growth in revenue, ebitda, and free cash flow.  They have indicated that while the economy cannot be ignored, they continue to see healthy demand.  On the negative side, the first quarter is historically the toughest season for the company on both costs and revenues, and this year we have to add in wildness in the foreign exchange markets.  And relative strength or not, likely revenue pressures from the overall economy cannot be ignored.  The company's guidance for 2009 reflected conservative economic assumptions, and I see no reason for that to change just yet.

In the following table I offer my own guess (and it is very much a guess) in the context of the previous two quarters and company guidance:

Lest anyone think that my forecast is too dour, according to Yahoo Finance, my numbers are at the top of the expected range.  But I don't think there's much science to the market's estimates this year, including my own.  Half of them are guessing, and the other half are throwing darts at the wall.  The bottom line is that EBITDA and FCF should improve over the full year, but in the short term it would be crazy to look for a big quarter right now on any front and therefore nobody is doing so.  Long term revenue trends will likely be lost in the noise until things calm down later this year.

That said, overall the first quarter has not been as disastrous in the telecom and internet infrastructure sectors as the market has expected, which does leave some room for upside.

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Categories: Financials · Internet Backbones

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