I suppose I should have waited for the PR, since along with the $50M raised by XO Holdings (news, filings) came actual updated guidance. But then who expects anyone to raise guidance after hours on a Friday leading into a three day weekend? That’s when companies prefer to trickle unfavorable news into the market so that cooler heads prevail when the markets open again. Good news is for Monday or Tuesday mornings. But anyhow, XO’s updated guidance and the data one can derive from it looks quite good:
Full Year 2010
|Ending Cash Balance||$49-51M||$42-52M||$42-52M|
At the bottom I have calculated the derived Adjusted EBITDA Margin implied by guidance. I have given XO a lot of grief over its lagging EBITDA margin performance, but if they manage a sustainable step upwards to 15% I will gladly offer my congratulations on making some real progress – though this hopefully would be just the first such stage. Since revenue doesn’t seem to be shifting as rapidly, one must assume that costs will be down in the second half. Perhaps those layoffs we reported here back in June actually did help profitability? That and the always shifting product mix of course.
Note also the lower capital expenditures forecast for Q4 – no doubt influenced at last by those dropping cash levels. Clearly they would prefer to have a larger capex budget, but it *appears* that XO will enter 2011 missing something they have long had too much of – cash burn. Is it time to let XO out of the doghouse? Maybe just for a little while? Not Icahn of course, he seems to like it in there. And the stock – well, he’s still gnawing on that bone. But the company & its operations perhaps?
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