Global Crossing Shifts Back Into Gear

July 28th, 2009 by · 3 Comments

International network service provider glbc reported earnings after the bell. Revenues of $633 were up strongly from $609M in the first quarter.  Of course, it's hard to make judgments based on those numbers alone.  Currency fluctuations drowned out all other revenue trends in the past two quarters with a combined negative swing of some $63M, and now at least some $11 of that has swung back in the other direction.  On a constant currency basis however, Global Crossing still managed a return to growth mode in all three regions:  GCUK, GC Impsat, and the Rest of the World.  The weakest growth is still coming out of the UK (around 1% sequentially with constant currency).  Overall though, it is quite a bit more pleasant to be talking about growth again.

Adjusted OIBDA of $93M was likewise a sequential improvement from $75M, as costs remained in check.  All in all, previous guidance was maintained and it continues to look quite reasonable.  Free cash flow of $-10M in the quarter does leave them needing +$92M [edited, original $108 was an error on my part] or better to make guidance of $50-100M, however normal seasonality in working capital will help a bunch and so will lower capex needs in the second half.  Capex was higher in the first half as the company added undersea capacity to Europe around Latin America and South America.

Company management indicates that the improvements in the financial markets over the last quarter have made such consolidation much more feasible.  There are more discussions out there than there were before.  Global Crossing has been quite vocal all year about the benefits of consolidation amongst its peers right now, and from what I see they are still keeping ready for it when the time comes - keeping everything well polished just in case.  Whether that means as an acquirer or acquiree is not yet clear, but I'll bet *something* happens this year for them.

Overall, the company sees demand as remaining solid and on schedule despite the recession, for both whoelsale and large enterprise customers.  That continues to be one of the more positive takes on the sector's underlying economics, and it should be interesting to contrast their comments with those of Level 3 Communications (NYSE:LVLT, news, filings) on Thursday.

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Categories: Financials · Internet Backbones

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3 Comments So Far


  • carlk says:

    Are you O.K. with their cash and liquidity as respects capex or lack thereof?

    Unrestricted cash was reduced by more than 12 percent qoq notwithstanding pros and cons, i.e., DF sales, reduced interest payment expense, WC savings, pp&e expenses, etc.

    At this draw down rate, that’s eight quarters left of cash, if I am not mistaken.

    The economy better get better for them or their runway is not sufficiently long.

    I’m with Morty on the principle of (3), for example, not being one to pay up as a result of the synergies its own network would bring to Glbc customers.

    Conference call might be interesting tomorrow.

    I can’t ever recall GLBC reporting ahead of (3) in the past. It always played follow the leader inclusive of street talk or telecom speak, by their CEO vs. (3)’s.

    Will you be listening in?

  • Rob Powell says:

    I think their cash position is ok given the seasonality in working capital that companies like lvlt, twtc, and glbc all see – H1 burns, H2 generates.

    As for the timing of results, yes this is definitely the earliest I have ever seen glbc report this early in the season. I think it has to do with the transition to the new CFO this spring.

    And yes, I’ll be listening on on this and many other calls over the next few weeks.

  • carlk says:

    Was it unusual for there to be no mention of “consolidation” at all, including the Q&A session on their CC today?

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