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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