Telecom Ramblings

Competitive longhaul and metro fiber operator XO Holdings (news, filings) filed their quarterly 10-Q today against the backdrop of Carl Icahn’s bid for the common shares he doesn’t already own and R2’s attempt to slow him down in the courts.  Revenues of $385.6M were up 2% sequentially from $377.8 in the first quarter.  That’s quite a strong number for XO at a time when many of its direct competitors are struggling to hold the line in a tough economy.  They did it by [Read more →]

Metro fiber specialist abvt reported earnings this morning, showing why they had the confidence to announce a two-for-one stock split last week.  Revenue of $88.0M grew sequentially from $85.4M in the first quarter despite the recession.  Adjusted EBITDA of $38.5M was also up sequentially from last quarter’s unexpectedly high $38.2M.  EBITDA margins fell slightly from 44.7% to 43.8%, but remain above 40% and higher as anyone has any right to expect in this sector.  Earnings per share of $1.95 were, also very strong.  A few more datapoints and we will have to start believing them, eh?   [Read more →]

Upstart internet backbone provider Cogent Communications (NASDAQ:CCOI, news, filings) reported earnings on Friday, and managed a pretty good quarter.  Revenues of $58.0M were up $2.9M sequentially, or 5.3% – better than both its own projections and the street’s estimates.  There was a positive foreign exchange impact of $0.7M, but overall it was an impressive number given the stagnation Cogent saw for the previous several quarters. On-net revenues were up 4.9%, while off-net and non-core revenues were up 7.0% and 6.6%, pretty much across the board.   [Read more →]

Fiberlight announced that they have raised $13M in debt from CoBank, the first time they have ever accessed the debt markets directly.  The company has been building out heavily in the DC area this year, including a completely new build to Culpeper VA hooking up Terremark’s new facility.  The difficulty for smaller players in this space hasn’t been finding worthwhile projects, but finding the funding for them.  Fiberlight isn’t saying precisely what they will do with the money, but it’s no mean feat to raise money these days.  It can be done, but only with [Read more →]

In the hours since Cisco Systems (NASDAQ:CSCO, news, filings) reported its fiscal fourth quarter and full year earnings, dozens or perhaps even hundreds of articles have been written parsing every word said by CEO John Chambers, every line on the balance sheet.  As Cisco goes, so goes the recovery, or so the media seems to think.  The key phrase?  We may have, perhaps, possibly, reached the ‘tipping point’ sometime during the quarter.  It’s a lovely phrase, meaning whatever we want it to mean.  It’s the kind of phrase CEOs feed us when we demand answers he (or she) doesn’t have.   [Read more →]

This is a guest post by Paolo Gorgò, who blogs over at Nortia Research.  Anyone else who might be interested in a guest post may contact the webmaster.

As Rob noticed in his previous article, “Another sequential decline at Akamai”, the company reported both revenues and EPS down from 1Q 2009, for the second time in a row: [Read more →]

IP and colocation services provider Internap Network Services (NASDAQ:INAP, news, filings) reported earnings today, and made some changes that give us a much better idea where new CEO Eric Cooney will be taking the company.  Revenues for the second quarter were $64.4M, the first sequential increase in three quarters and slightly above expectations.  IP revenues held steady, while colocation revenues were the engine of growth.  EBITDA of $6.8M was also a sequential improvement.  Considering the [Read more →]

Telecommunications equipment giant Alcatel-Lucent (NYSE:ALU, news, filings) has had two nice wins in the last two days.  Yesterday the company announced its routers have been selected by NTT Communications (NYSE:NTT, news, filings) to support Japan’s first MPLS-based IPv6 IP-VPN service.  NTT has been on the forefront of the IPv6 movement, especially in Japan where it is really starting to take hold.  Enterprise customers there now have a migration path for when IPv4 addresses run out, or perhaps more precisely [Read more →]

Competitive local exchange carrier PAETEC (news, filings) reported earnings this morning, showing some wear and tear from the economy but nothing terribly major.  Revenues of $395.2M were down sequentially from $399.8M in the first quarter.  According to the company, revenue pressure came primarily from usage based POTS service and access fees, while data services managed to grow a bit.  Economic pressures may be easing, but they are definitely still out there.   The company pointed simply toward fewer business calls being made by fewer employees, i.e. a direct effect of the increased jobless rate. [Read more →]

In the latest installment of the saga of XO Holdings (news, filings) and Carl Icahn, R2 Investments sent a following letter to the ‘independent’ directors of XO Holdings.  Reading this letter is an entirely different experience from the PR we have to wade through every day.  It was clearly put together with great care, dripping with sarcasm, anger, and a certain resignation.  I find R2’s speculation about how Icahn’s offer will proceed and evolve over [Read more →]

In what some will see as a somewhat surreal event, metro fiber specialist abvt announced yesterday that they will effect a two-for-one  stock split on August 20 in the form of a 100% stock dividend.  They just got listed on the NYSE back in May after an epic crawl out of the MFN bankruptcy back in the last bubble.  The company’s stock has been trading in the neighborhood of $80 despite the economic turbulence, so they certainly have the room to pull it off.  The market has welcomed them back, and hence the split.  But having this particular company doing it while the rest [Read more →]

Yonder Media and surw announced today that Yonder has acquired the fixed wireless customer base of SureWest.  SureWest has been selling off all the bits and pieces of its wireless business over the last few years, preferring to focus on its wired efforts.  One has to wonder though about the press releases.  At 3:53pm they ‘entered into an agreement‘ and at 5:52pm they had ‘completed the sale‘.  Two hours?  You can’t even close on a house in two hours most of the time, nor can most companies write a PR that fast.  Not that it matters [Read more →]

Upstart WiMax provider clwr announced today that it will officially start selling CLEAR 4G in ten new markets on September first:  Bellingham WA and Boise ID  in the northwest, and eight more in Texas:  Amarillo, Lubbock, Odessa/Midland, Wichita Falls, Waco, Killeen/Temple, Corpus Christi, and Abilene.  That gives us a much better idea how they’re going to launch in 80 markets by the end of 2010.  Tier 1 markets are hard, they’ll be rolled out one at a time.  Tier 2 and 3 markets take a bit less effort and can be rolled out in groups. [Read more →]

International wholesale VoIP carrier IBasis (news) [a subsidiary of KPN (NYSE:KPN, news)] rejected an offer from majority shareholder KPN (NYSE:KPN, news) late last week.  The offer of $1.55 per share was made three weeks ago, and represented just a 19% premium above the stock price.   That stock price immediately jumped to $1.80 and above, implying that investors expected a revised offer.  So this move by Ibasis’s board isn’t surprising anyone. [Read more →]

Earlier this week, three European telecommunications giants reported earnings, and all three defied the recession and posted pretty good numbers.  That’s not to say that things are wonderful, all three reported most metrics down from a year ago.  But all things considered, they held the line and maybe pushed back the gloom just a little bit. [Read more →]

Last summer, if you recall, XO Holdings (news, filings) refinanced its debt by selling preferred shares to its majority owner, Carl Icahn.  A minority shareholder, R2 Investments, challenged the deal, and the argument and evidence behind that case are just now coming to light in court documents.  The accusations against Icahn and the board of directors which he controls are really quite amazing, considering Icahn’s public image as a crusader for shareholder’s rights and accountability for directors. But I’m not a lawyer and what I’ve seen so far is just one side, so I’m not going to judge the whole case right now.  But there is one item of great interest to me, found in Exhibit A.  Here it is, verbatim (emphasis added by me): [Read more →]

[TheJuice blogs about his financial models and projections for telecom companies, most frequently about Level 3 Communications.  If you have something to share on Telecom Ramblings, contact the webmaster]

Here is the current state of my LVLT model following today’s earnings report: [Read more →]

It sure has been a tough sales year so far at Level 3 Communications (NYSE:LVLT, news, filings).  In their Q2 earnings report today, they lost another 4% sequentially off the top line with total revenues of $942M.  Core Network Services revenue, its the key growth engine, fell by 2% sequentially to $877M.  That revenue pressure was less than during the first quarter, but still quite a bit tougher than expected by most, including myself.  The company blamed the economic environment for its sales weakness, stating that while things improved during the quarter they didn’t happen as quickly as they expected.  Large wholesale customers continued to reign in spending at levels that will be unsustainable at some point. [Read more →]

In its earnings report today after the bell, Akamai (NASDAQ:AKAM, news, filings) checked in with revenues of $204.6M and normalized earnings per share of $0.40, both down from $210.4 and $0.43 in the prior quarter and both apparently below expectations which seem to have been expecting something more flat with Q1.  The company blamed difficult market conditions for its customers, or in other words the economy was tough this quarter.  Certainly Akamai’s shareholders are feeling a cold wind blowing, two consecutive [Read more →]

As regular readers of Telecom Ramblings know, I have long kept a detailed financial model of Level 3 Communications (NYSE:LVLT, news, filings), which reports earnings tomorrow morning.  The depth and power of this recession has rendered that model rather ineffective currently, since long term trends right now mean far less than short term disturbances.  So this quarter I am flying a bit more blindly than usual.  In the first quarter, Level 3 suffered substantial revenue pressure across nearly all lines of its business, and currency fluctuations managed to make the numbers look even worse.  Much of this was certainly due to the recession, and the market expected far worse at the time – the stock is up a bunch since then.   So then what to expect from the second quarter?  [Read more →]

So many companies in this sector have chosen today and tomorrow to report earnings that it is hard to keep up with.  There’s only so much one can say about each, so lets go through a few of them quickly:

Sprint Nextel (NYSE:S, news, filings) released earnings today, proving that they have turned the corner but also that it is a long corner.  They lost ‘only’ 991K postpaid customers, gained 938K in the prepaid department over at Boost Mobile, [Read more →]

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 [Read more →]

In a surprise M&A today, Sprint Nextel (NYSE:S, news, filings) has agreed to buy Virgin Mobile USA in an all stock deal worth $483M.  Virgin’s prepaid phones already run on the Sprint network, so the integration will be nothing like the Nextel disaster.  In fact, little physical integration seems to be needed.  Basically, Sprint has bought a new brand parallel to its rapidly expanding Boost Mobile offering, and doesn’t do itself any damage in terms of debt in the process. [Read more →]