Wholesale Growth, Access Savings Kept Level 3 on Track in Q2

July 29th, 2015 by · 31 Comments

In recent quarters, it has been enterprise sales that have held up the company’s growth trajectory, but in Q2 it was the wholesale side that chipped in when enterprise revenues came in a bit light.  That combined with strong savings on network access let Level 3 beat estimates on EPS and EBITDA even as total revenue came up a bit short.

$ in millions Q2/14 Q3/14 Q4/14
pro forma
Q1/15 Q2/15 Comments
 – North America – Wholesale 367 368 425 438 450 NA Enterprise revenues grew slightly, but didn’t impress.  But wholesale saw another strong quarter of growth.
 – North America – Enterprise 684 695 1080 1097 1,101
 – EMEA – Wholesale 86 80 75 69 68 Stabilizing at last perhaps?  I look forward to the company’s comments on this sector
 – EMEA – Enterprise/Gov 143 139 146 138 136
 – Latin America – Wholesale 42 42 41 40 40 Still not the growth engine it had been for so long, but holding steady nonetheless.
 – Latin America – Enterprise 157 158 151 145 146
Total Core Network Services 1,479 1,482 1,918 1,927  1,941 Growing 5% over the same period last year, pro forma.
 – Wholesale Voice & Other 146 147 134 126 120 No surprises.
Total Revenue 1,625 1,629 2,052 2,053 2061  Analyst estimates had this at $2.08B, which turned out to be high.  But the growth trend is intact.
Network Access Costs 724 723  696 This is the big cost savings number for Q2.  Was it all integration, or were there any one-time items to be aware of?  Fodder for the conference call.
Network Expenses 357 351 359 I’d guess this is where we saw some integration spending in Q2.
Cash SG&A 344 339 336 As promised, headcount savings from the integration are not being hurried.
Comm. Adjusted EBITDA 459 471 625 635 665 Very strong, mostly carried by network access savings.  Includes $5M of integration expenses
Adjusted earnings per share 0.21 0.35 0.35 0.35  0.42 Excludes a loss of $0.46 from debt extinguishment.
Network access margin % 62.3% 62.7% 64% 64.8% 66.2% The biggest gross margin we’ve seen from Level 3.
Adj. EBITDA margin % 28.2% 28.9% 30.5% 30.9% 32.3% The same gross margin boost shows through in a significant EBITDA margin jump.
Capital Expenditures 241 204 346 254 317 Seems to be in the right range.
Free Cash Flow 62 117 (9) 51  102 With Q1 and Q2 both positive, this is looking to be a banner year for FCF for Level 3.

Revenues: I’ll be curious to hear the story behind the North American enterprise revenue growth deceleration, although it had to hiccup sometime.  Wholesale strength surprised me in the other way though.  Looking to hear more about the European turnaround project, and hopefully about Latin American projects as well.

EBITDA: Cost savings in network access were huge, driving the rest of the numbers to happy places.  This appears to be where the company has put its integration spending, and it has paid off.  With only $5M in integration spending during the quarter, though, one wonders when the really heavy lifting starts.

Outlook: Revenues may have looked a bit light to the street, but the margin profile improvements more than compensate for that in my book.  Level 3 maintained its general projections for the full year of 14-17% adjusted EBITDA growth and $600-650M in free cash flow.

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31 Comments So Far

  • RC says:

    I suspect the slowdown in Enterprise revenue growth has to do with their across the board rate increases on data network services. Could be any number of reasons of course, but I’m sure the rate increases are at least somewhat responsible.

  • Rob Powell says:

    According to the call, about $10M of wholesale’s growth was a one time settlement thing which also contributed to margins, which reduces the positive side of things somewhat.

    The market doesn’t like the results too much, with the stock down 6-7%. .

  • Anonymous says:

    With Level 3 (LVLT) Q3 earnings around the corner, there’s nothing like a little Reduction In Force (RIF) sprinkled with a ton of greed to ask WTF.

    But what’s a company to do when the $EUR & Brazilian $BRL lose some 30-50% against the $USD? Lay off employees, of course.

    Now, with a debt load of $11b that may be the right thing to do, you know, to preserve cash and all.

    But that’s not what Goldman Sachs (GS) recommends. Nope, they think a better use of lvlt cash is to buy back LVLT stock. And who can argue with such sound logic. I mean, when you can’t generate enough EBITDA or Revenue or Cash Flow or Earnings to excite investors, YOU CAN DO IT ON A PER SHARE BASIS BY SHRINKING THE NUMBER OF SHARES OUTSTANDING.

    So why not use that precious savings from the RIF and the available cash on your balance sheet to buy back your own stock?


    Ah, i-bankers, gotta luv’m. If they’re not screwing something up, the system just ain’t working.

  • debt questions? says:

    The debt questions have been solved. Period. Most of those wild buyback assumption begin with the baseline that they are underlevered if not now then within the next 18 months.

    • Anonymous says:

      The “debt questions” have been solved? By who? LVLT hasn’t eliminate any portion of the $11b in long term debt? It still appears on their balance sheet.

      Or are you saying $11b doesn’t really matter anymore b/c they’re cost of capital is so low TODAY (due ENTIRELY to Fed’s 7yr NIRP/ZIRP programs)?

      At some point rates will normalize, even Fed’s last statement had Fed Funds rate going back to 3.5% from .25% over next couple years. Add 300bps to that $11b — which you will ultimately have to refinance unless you retire the debt — and you’ve got another $300m/yr in debt service. (At this point you tell me I have no understanding of corporate finance.)

      They’re underlevered? According to what brilliant mind? So some i-banker’s solution is to add more ballast?

      And the solution to being underlevered is to use corporate cash (or worse borrow more money) to buy back stock?

      Buying back stock won’t create one iota of productive capacity for LVLT. It won’t enhance by any measure a sales manager’s ability to sell an incremental unit of bandwidth on the LVLT network. It won’t position the LVLT customer support organization or sales engineering teams to do a single thing they can’t already do.

      It will do absolutely nothing but HOPEFULLY increase the share price by lowering the number of shares outstanding. Of course, the ROI for all those SPX companies that bought back their stock in 2014 has been flat to negative.

      If you have too much cash on your balance sheet and you have nothing better to do with it, give it back to your shareholders. That’s what dividends or a 1-time special dividend are for.

      (This is where you try to equate a stock buyback with a dividend by saying they’re really the same thing. But, they’re not, not even close. And you make this argument, in part, by using the tax code’s favorable treatment of capital gains vs. dividends. But inducing shareholders to hold stock in a company that has no other ideas to produce higher returns other than buying back their own stock is not really the proper way to manage this.)

      You know who hopes (and stands) to benefit most from stock buyback if they’re successful? The executives in the rarefied air in Broomfield. And if it doesn’t work, oh well, “the board told us to do it.”

      Meanwhile, that $11b in LT debt sits on their balance sheet like a ticking time bomb waiting to be refinanced.

  • debt questions? says:

    Who did it?
    L3 solved their own debt questions, mainly Sunit Patel but also Jim Crowe if you really think about who got those middle of the night refi’s done in 2009. Much of it was the synergies from GLBC and now TWTC that grew the ebitda but also a topline which never rolled over the way the rest of the enterprise space has.

    Who defines it solved? By whose definition?
    The bond market is the easiest answer. They have now priced its spread inline with an investment grade rated company and the rating agencies are following suit even if they are behind as they always are. Moody’s opinion is the most recent from a few months ago(https://www.moodys.com/research/Moodys-Upgrades-Level-3s-CFR-to-Ba3-stable–PR_332344). Most of the buyside models 3.5x debt/ ebitda by midyear 2016.

    What will they do with the “excess” cash?
    Well excess is the cash not needed to run the business as defined by the company but endorsed by the debt market as previously mentioned. The company has said it will be used to expand the network organically and then inorganically.

    Anonymous you seemed confused but I think you have come to the right place as Rob’s site is excellent.

    • Anonymous says:

      None of this has anything to do with building a better network for customers. I second the motion of dull and uncreative.

  • Anonymous says:

    Debt Questions, I’m not confused. Not even a little. I’m just not sucking down the kool-aid and believing that Sunit has done something every other S&P 500 and S&P 400 Midcap CFO hasn’t also done, that is refinancing their debt.

    I’d recommend you take a close look at SIFMA’s corporate bond data to see that most of newly issued bonds are merely refi’d bonds, (confirming Sunit’s just like every other CFO out there and I mean that as a compliment.)


    (If you need help understanding how to read the data, I will happily guide you through it.)

    What you fail to understand is that the $11b of outstanding LVLT debt will have to be refi’d at some point UNLESS SOME PORTION OF IT IS RETIRED.

    By the way so will the $8.1t in corporate debt outstanding today. (See third tab on “US Bond Market Issuance and Outstanding” spreadsheet.) If you doubt most of the outstanding debt is refi’d debt, look at second tab, “Issuance”, and add up cells F18:F23 + F47:F55. You will get 8.4t. Yet total corporate debt (“outstanding” tab) during the same period only grew from 6t (cell E34) to 8.1t (cell E49).

    So, as noted, virtually every company has done exactly what Sunit the Great has done. Along the way, just like LVLT, these firms have also taken on more debt as well.

    At some point, (and as noted above), however, all of that debt will need to be refi’d. And when lift-off occurs smart investors will modify their DCF models to account for the cash flow hit associated with higher refi’d rates. If the Fed forecasts a 300 basis point lift on Fed Funds by end of 2017 (see forecast below) how do you think smart investors recalibrate their DCF forecasts?


    Idiot investors, on the other hand, will think that a jump from BB or Ba credit rating to BBB (investment grade) will offset that 300 bps.

    ROI expectations on equity will be adjusted downward b/c higher interest rates (or adjusted DCF models) will impact corporate cash flows. Compounding the situation further is that a normalized interest rate environment will make fixed income securities far more attractive to investors than they are now. Consequently, P/Es (or other multiples when earnings aren’t present) will adjust to normal levels.

    As for my confusion, well, let’s just say I’m not relying on Rob’s site for my financial education. Based on your comments, I’m afraid you might be.

  • debt questions? says:

    You sound like a 38 year old 1st year MBA student so this will be the last time I respond to you.

    Debt refi at KO is a yawn, saving the company form BK which is what I think Sunit did is by no means ordinary. This is not falling of Libor, which has fallen, but the SPREAD L3 pays above Libor which has fallen much more dramatically.

    I said nothing about doubting the debt was refi’d but you miss, or choose to ignore, the concept of debt service. $11bn is a lot of money when L3 was a $3bn mkt cap but with it at $16bn and ebitda growth that drove that rise in mkt price – this is not a grave or even moderate concern as debt/ebitda has fallen from 8x->4x with it forecasted to be 3x this time next year unless they spend more money expanding their network as I mentioned above.

    The Fed has been forecasting a liftoff for years, it has not happened – IF 300 bps does happen this decade than it will slow FCF growth but not materially. Review Goldman’s report to review the math b/c it shows that shows that based on current bond mkt forward expectations, Level 3 will see its interest cost fall next year. My guess is the refi adds $30mn+ to its FCF as the bond markets pricing them with even more reverence.

    300bps in 2 years is pie in the sky nonsense but that’s why you are back in business school. If the Feds FINALLY get there – I’ll buy you a share of L3.

    • Anonymous says:

      Meanwhile customers are wondering when they will get a service delivery on time, and thinking about how much less to give them next fiscal year.

    • Anonymous says:

      Don’t respond, please. If I sound like a 38y/o 1st yr MBA, then you sound like a 22 y/o Level 1 CFA candidate that right now simply regurgitates information you gleaned from a GS report you read in between cold calls to little old ladies in tennis shoes.

      Not sure what your point is about market cap as that has ZERO impact on debt service or ability to continue servicing debt. Global Crossing’s market cap at its peak was $52b in 2000. Do you want to discuss Enron’s or WorldCom’s market cap next? I’m pretty sure there wasn’t much relevance between Market Cap and their ability to service debt.

      (And let’s be clear, I’m not talking about LVLT facing BK, but rather if they should be spending cash to buy back stock and what the impact of rate normalization would be for a company with 11b LT debt.)

      EBITDA is the most over-used and misunderstood financial metric around. And in the hands of a neophyte is downright dangerous. That “I” in EBITDA can be a bitch. Just ask Jeff Skilling, Scott Sullivan, Bernie Ebbers and countless others.

      Let’s talk Free Cash Flow b/c that’s what matters. When you’ve refi’d your debt to historically low levels EBITDA is probably the worst metric to rely on and why you better look at FCF.

      So let me ask you this, Mr. Fastow, why do you suppose the markets selll off so violently when the Fed starts to hint at a rate increase? Could it be because lift off means equty valuations are a bit rich for a normalized rate environment? Could it be that adjustments to DCF models kick-in? Could it be that your 28 yrs old and have never seen a normal stock market and have no idea what one looks like? Could it be that you think spreads between TSYs and BBBs are always this tight?

      You keep reading GS reports for you knowledge. I’ll keep reading and analysing actual data.

  • Anonymous says:

    Debt Questions, it must have been you who schooled me on the Windstream REIT story too when I raised serious issues about the motivations behind that arrangement. Was it you that explained just how little I understood? That discussion was back in 2014. And I had serious questions about that deal which was finally executed in April 2015.

    Hmm…it didn’t take long to be proven right on that one. The two comments below from that exchange nicely summarize my thoughts when that gem of an idea was first floated.

    So, how have investors done since they finally introduced that WIN REIT on April 24, 2015? Let’s see, the REIT (CSAL) is down 28% and WIN is down 38% while the Nasdaq Telecom Index is down only 7.6%.




    Pecentage performance stock chart of CSAL, WIN & IXTC below from 4/24/2015-10/19/2015


  • Anonymous says:

    also, want to correct myself. Global Crossing had a market cap of $47b, 3x the market cap of LVLT’s current valuation. (Maybe it got higher, but that’s what I found.)

    In fact, at $47b Global Crossing’s market cap exceeded GM’s at the time. So please don’t use market cap to explain ANYTHING. I realize, of course, how much smarter we all are now and how we don’t fall into traps of listening to what sell side analysts tell us. Besides, SarBox and Dodd/Frank fixed all that, right?

    I mean, after all, who would be dumb enough to rely on current market capitalization and a GS report to support an argument?


  • anon says:

    Debt questions entire post was related to ability to service the debt which has seen debt/ebitda fall from 8x->4x->headed to 3x in one year’s time. Maybe ebitda is a creditor’s term but as an equity guy L3’s FCF growth and magnitude has been even more impressive than ebitda and it is what the equity and debt mkt has applauded.

    Mkt cap has risen yes but it seems like it was mentioned above it is driven by cash whether it is ebitda or actual fcf. If memory serves FCF has doubled each of the last two years before it looks to be registering $1bn+ NTM on falling debt/ebitda.

    Not sure how that type of growth is anything like what is going on at windstream or the crazy valuations of GLBC/Enron of 15 years ago.

    • Anonymous says:

      Anon, I believe your referenced 1b in cash flow is only looking at Cash Flow from Operations which is not a firm’s Free Cash Flow.

  • Anon says:

    No, fcf looks like 1bn-1.1bn in 2016 looking at consensus estimates.

    • Anonymous says:

      Respectfully Anon, I think the working definition of FCF each person is using here is a bit different and that is actually causing much of the debate

      For example, are we defining FCF as simply Cashflow from Operations (CFO) minus Capital Expenditures (CapEx)?

      Are we defining FCF as CFO – CapEx – Interest on Debt?

      Are we defining FCF as Free Cash Flow to Equity (FCFE)? Or Free Cash Flow to the Firm (FCFF)?

      It may seem pedantic or picayune but how FCF is defined is extremely relevant. Big Difference between FCF = CFO – CapEx and FCFE or FCFF

      Unless investors know how the analysts or the aggregator of analysts estimates measures FCF, mistakes will surely be made.

      Anyway, my point was, has been and continues to be that there is no reason for LVLT to spend any of its cash buying back stock. $11b is a lot of debt. If they’re generating that much cash, investors will surely reward the firm with higher equity price and richer multiples.

  • anon says:

    That’s why this ‘debate’ has been so confounding b/c it is FCFE:
    The formula is ebitda + or – working capital – capital/expenditures – interest expense

    • Anonymous says:

      If we’re using NYU Fin Prof Damodaran’s definition of FCFE (which isn’t different from really anyone else’s)

      Free Cash Flow to Equity (FCFE)
      Net Income
      – (Capital Expenditures – Depreciation)
      – (Change in Non-cash Working Capital)
      + (New Debt Issued – Debt Repayments)
      This is the cash flow available to be paid out as dividends or stock buybacks

      THEN I’m not sure I believe LVLT is generating 1b/yr in FCFE. If that’s the case we’ll see a huge chunk of that $1b in year over year improvement in Cash & Cash equivalents on the LVLT balance sheet. I could very well be wrong but I sincerely doubt that LVLT’s cash & cash equivalents are growing at that rate.

      If that’s not the defninition of FCFE you’re using, i’d be interested in your equation of FCFE.

  • Anonymous says:

    IBM may be the poster child for why you don’t use your FCF to buy back your stock. Over 2yrs spent $27b on stock buybacks and stock’s near 5yr low.

    “In 2014, IBM purchased $13.68 billion in outstanding equity as compared to $13.86 billion in 2013.”

    Outcome: IBM’s down 28% since 1/1/2013.

    I know, LVLT is no IBM.

  • anon says:

    IBM is down b/c of terrible revenue performance. You could write the exact opposite about Disney where buybacks were wildly value add.

    The lesson for Storey/Sunit is basic finance – only buy your stock back if it is undervalued. But as they said, they would not do that until money is spent on their networks or someone else’s to further their value to their customers.

  • debt questions? says:

    L3 beat FCF by a country mile, leverage ratio comes in again, debt spreads narrow further. Anon, tell your business school professor you now know what happens in chapter 2 but please cite Telecom Ramblings.

    • Anonymous says:

      Debt Questions, I agree. LVLT did knock the cover off the FCF. All the more reason to retire debt, not consider taking on more. If LVLT has learned anything over the last 17yrs, it’s that the good times don’t survive forever.

      But let’s be clear on something, they added an incremental $100m in cash & cash equivalents from the Dec 2014 balance sheet while holding LT debt at 11b. I don’t see the incremental $1b/yr in FCF bandied about above in their, yes, very impressive quarter.

      If they achieve those 1b/yr numbers, that would be terrific and the stock will perform extremely well. THUS, there would be no need for any stock buyback which was the initial point of my comment.

      As noted earlier:

      “Buying back stock won’t create one iota of productive capacity for LVLT. It won’t enhance by any measure a sales manager’s ability to sell an incremental unit of bandwidth on the LVLT network. It won’t position the LVLT customer support organization or sales engineering teams to do a single thing they can’t already do.”

      Everything I said above is correct. Most notably, Sunit’s refi activity is consistent with the actions every other SP500 CFO. (You can ignore the data in the links I provided, but it’s pretty clear.)

      Many years ago on these pages I invoked Hyman Minksy to the derision of some (and no doubt will again here). The debt risks Minsky laid out in his seminal ’92 paper Financial Instability Hypothesis are more relevant today than ever.

      My Minsky point as it relates to LVLT is that if they’re generating excess cash flow, they’d serve their shareholders far better by retiring (or, even buying back debt if adequate call features don’t exist in outstanding debt issues) than buying back stock.

      Nonetheless, I will say congrats to LVLT on an excellent quarter.

  • debt questions? says:

    If you remember before your comment I talked about the “wild buyback assumptions”.

    The point is that the debt is not a concern. It is just $100mn added this Q, but $25mn ahead of expectations. $1bn would not be a terrific number, it would be a bad #. I think you are missing the magnitude of the FCF ramp and how that makes the company more valuable and less risky.

    Why is $1bn a bad #? B/c forward estimates of FCF(Citi) of $1.1bn and $1.3-$1.4bn in 2017. These cash flows will continue to enhance the network, shrinking the leverage ratios. $11bn in debt should only be repaid if you are not getting greater IRRs growing that FCF.

    That is what they should do and I believe what they plan to do. They have said adding organically is their first priority; inorganic is their second priority; buybacks would be 3rd. While the first two strategies won’t lower the debt, the company strengthens by adding to its fcf capabilities even more so than paying down debt.

    The debt as I said, is not a concern – period. Why, b/c their cash flow and network strength is what the bond markets and even shareholders continue to applaud.

    • Anonymous says:

      Your (and I use that term very loosely) arguments are interesting and very well may be correct, but the basis for your argument comes directly from sell-side analyst forecasts/projections. Those firms have a vested banking interest in LVLT. Just above you cite Citi and above that it’s GS.

      With all due respect, you’re simply regurgitating what Citi, GS, and I’m sure other sell-siders with equally strong banking interests in LVLT are saying.

      I’m not reading any original thought or analysis in your comments, sorry.

      It’s clear to me that you’re pretty young, since you obviously think 38 is pretty old. (Hint: I’m older.) This tells me that you haven’t been around many bear markets. If you’re 30 (and I suspect you may be even younger) that means that you haven’t been through a full debt cycle yet as a professional. If you’re 30, you haven’t even been around professionally for a Fed Funds rate increase.

      Should I discount your opinion because you’re young? No. But you offer no real opinion other than what you’ve read in GS/Citi/etc. reports.

      If you said, for example, cost of access will decline x basis points (as a percent of revenue) as a result of eliminating xx entrance facilities at y COs or ethernet migration of xx traditional access facilities will generate z basis pts (as a percent of revenue) in savings, I’d listen carefully. But that’s not what you’re saying. You’re simply regurgitating Citi & GS FCF forecasts.

      Perhaps it’s my own bias but I put very weight on sell-siders forecasts/projections.

      Finally, I hope LVLT does choose the organic approach to revenue acquisition. That has not been their strongest suit to date. HOWEVER, their off-net cost structure has been declining as a percent of total revenue as result of their previous acquisitions and product mix change. This should position them nicely to acquire organic revenue.

      But they’re not operating in a vacuum. Comcast has been moving up the Enterprise value chain and VZ & SBC won’t rollover and watch LVLT steal their customers.

  • debt questions? says:

    I am just trying to give you consensus as I didn’t think I needed to be more specific given you did not seem to be financially very sophisticated. I am older but the age thing is a distraction. Consensus opinion has been stale on this company for a long time. The point again was that repaying debt has not been, is not and I don’t think will be a good strategy. The bond mkt is telling you this again today as they look to have a bigger appetite for L3’s refi than L3 planned. Looks like the bond deal is being upsized by nearly 2x to boost fcf and refi the 2016 paper on ever lower spreads. If I were guessing I would say mid 5s.

    The suggestion they need to pay down debt sounded like you have never financed a company. I will hold to that assertion whether or not you have been to business school. It is like Yogi Berra said, “In theory there is no difference between theory and practice. In practice there is.”

    On my #s, I have my own forecasts of FCF which the sellside is finally coming around to but are not quite there yet. I expect 2017 FCF to be 40% north of the $1bn figure you have deemed “terrific”.

    My FCF estimate was much higher this summer(as well as fcf/share) but I had assumed they would layer in Colt which did not happen and I think was the primary reason their stock was off. If that deal happens next year as Cowen assumes I think we are in a totally different ballpark. Either way, the idea that they need to be paying off debt instead of taking the path they took which I endorse of growing FCF defies logic.

    • Anonymous says:

      Debt Questions, you’re funny.

      For starters, at no point did I ask for a consensus on what sell-side analysts were saying.

      Second, since you keep telling me how markets are reacting to today’s news e.g., bond market reaction to LVLT bond refi, I’ll refer you to Ben Graham’s dictum: “In the short term the market is a voting machine, not a weighing machine.” (I know, not quite Yogi.)

      So I’ll withhold judgement on how the market’s reacting today. More relevant to today’s bond news, however, is that as far as I can tell from the LVLT debt news today, they’re not taking on new (incremental) debt, merely, once again, refinancing (presumably at more favorable terms as you suggest) existing debt.

      Third, I don’t understand this comment at all:

      “The suggestion they need to pay down debt sounded like you have never financed a company.”

      Here is where you and I radically depart. The idea isn’t to perpetually rollover debt you needed to acquire a company years ago or assets that have been used, fully depreciated & retired, but rather to generate sufficient cash flow from the acquisition or asset to retire the debt needed to finance that acquisition or those assets no longer in use.

      Your perpetual debt rollover model is precisely Minsky’s point. Minsky termed your perpetual rollover model as “Speculative Finance” where you can pay the debt service but can never repay the principal. The elegance of Minsky resides here (which I took right from the Minsky wiki page to make it simple for you):

      “Minsky claimed that in prosperous times, when corporate cash flow rises beyond what is needed to pay off debt [A POINT LVLT IS NOWHERE NEAR], a speculative euphoria develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis. As a result of such speculative borrowing bubbles, banks and lenders tighten credit availability, even to companies that can afford loans, and the economy subsequently contracts.”

      Now this sounds like a thesis someone cobbled together in 2009 after the last crisis, but Minsky first introduced it in 1974 and beautifully refined it in his 1992 Financial Instability Hypothesis paper.

      How many oil/energy bubbles, commodity bubbles, telecom bubbles, sovereign debt bubbles, housing bubbles, banking bubbles, etc. have followed this direct path since Minsky 1st introduced his ideas?

      You seem to think debt is something you continually accumulate and rollover and paying it back is just downright silly, stupid and naive, not to mention financially unsophisticated.

      I have no problem with Level 3 taking on additional debt to finance acquisitions, but juggling more and more balls or refis instead of retiring debt will fail at some point even, as Minsky suggests, LVLT is still financially strong.

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