Telecom Ramblings

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 →]

In May, it was heavily rumored that CDN provider Velocix was for sale.  At the time, Dan Rayburn reported that a telecom equipment provider was in the hunt, and those rumors have now proven true: Alcatel-Lucent (NYSE:ALU, news, filings) today announced it will acquire the company.    I was skeptical at the time, but one never can tell in this sector who is going to jump on new technology.  Dan Rayburn has more details on the acquisition. [Read more →]

There was a time when it was MicroSoft that always won, always made the right moves.  What they touched turned to gold, or whatever currency you prefer.  But ever since it went public the golden touch has belonged to Google.  By and large it still does of course, but when Google agreed to sell back its share in AOL to Time Warner today at a loss of $717M it was definitely not a moment reminiscent of King Midas.  [Read more →]

Telecommunications giant Verizon (NYSE:VZ, news, filings) released earnings this morning, giving us another update on how the industry is weathering the economy.  Revenues of $26.86B and earnings per share of $0.63 were inline with expectations. Wireless subscribers grew by a net 1.1M, wireline connections fell by another 880K, and FIOS subscribers grew another 300K, all of which sounded awfully familiar.  Overall, I found very little to get excited about in either direction in this report.  The 800lb gorilla managed to jump in the pool without making a discernible splash.  [Read more →]

On Friday, Telecom Ramblings was pleased to welcome a guest post by Steven Parrott of Sprint Nextel (NYSE:S, news, filings) and The Seamless Enterprise on the subject of core competencies and network operators.  His take was not solely in the context of Sprint’s recent deal with Ericsson for the outsourcing of network operations but in general as well.  The argument he makes boils down to one I’ve heard before, but which has become somewhat endangered in the carrier space:  that the industry is best served by horizontal disaggregation, with each participant focusing its efforts on the layer it does best and leaving the layers it doesn’t to others who do.  In a previous incarnation from the last bubble, it was an unfulfilled [Read more →]

There was so much happening last week with earnings reports and other announcements and many other things going on offline, and when that happens some news just slips through the cracks – at least temporarily.  Two such stories that involve companies covered frequently on this website did just that this week.  TW Telecom and Zayo have something in common, or so I seem to feel.  Through this economic firestorm over the last year, both have managed to come through it with their gameplans almost [Read more →]

This is a guest post by Sprint-Nextel’s Steven Parrott who also blogs regularly on The Seamless Enterprise, the company’s corporate blog. Steve leads Sprint’s IP convergence Product Development team in the areas of MPLS VPN, managed service and Unified Communications.  Anyone else who might be interested in a guest post may contact the webmaster.

How do you define a “real” carrier?

That question arose recently after my company, Sprint Nextel (NYSE:S, news, filings), announced a seven-year deal to partner with Ericsson to run many of its day-to-day network operations. Before anyone could say the word “partner”, questions were being asked such as: [Read more →]

The United States Coast Guard has selected Level 3 Communications (NYSE:LVLT, news, filings) for its networking and voice needs, according to a press release yesterday.  Level 3 will provide connectivity between some 10 sites within the DC area as well as voice services to each.  The company’s extensive metro footprint throughout the Washington DC region was obviously the main [Read more →]

It was a busy day yesterday on the earnings front.  In the telecom equipment segment, Juniper Networks (NASDAQ:JNPR, news, filings) had a rough time, although on paper things weren’t so bad.  Revenues of $786M were actually better than most had projected, breaking the steady downward trend.  Earnings per share of $0.19 seemed to be inline with expectations.  Likewise, projections for Q3 weren’t far off.  But there are projections and there are hopes, and clearly the market was hoping for much better.  The fortunes of equipment makers can turn on a dime, and [Read more →]

RCN Metro, the metro fiber division of RCN Business (NASDAQ:RCNI, news, filings), announced today that it has been selected by OpenCape to build and operate a fiber network hooking up Cape Cod and southeastern Massachussetts to Boston and Providence.  The network, as currently planned, would span 300 miles and look something like this: [Read more →]

In the first datapoint from the colocation and datacenter sector, Equinix (NASDAQ:EQIX, news, filings) reported Q2 earnings after the bell yesterday.  And quite a report it was!  Revenues of $213.2M were above both expectations and guidance of $206-210M.  Adjusted EBITDA of $99.5M was even better, well above projections of $92-94M, and earnings per share of $0.44 well above the street’s projections of $0.33 or so.  Of course, the datacenter space has been the strongest in the sector throughout this recession, and we can only hope that the rest of the sector had even a sliver of the quarter these guys had. [Read more →]

So much news lately…  Privately held CLEC Integra Telecom announced today that it has restructured its balance sheet.   The deal swaps debt for equity and will bring their debt down to about $600M, down from $1.3B.  Of course, there is a price and in this case it is dilution – with Goldman, Sachs & Co., Tennenbaum Capital Partners, and funds managed by Farallon Capital Management LLC as major new shareholders.  The exact terms of the deal were not disclosed, but we can draw a few inferences. [Read more →]

International IP network operator glbc announced today the opening of a new datacenter in Amsterdam.  The new facility, which follows a similar build in London’s Docklands last year, is a part of the company’s push into managed services in the European corporate marketplace.  Their first customer, apparently, is Dimension Data.  This gives them 17 full scale datacenters worldwide, though they offer [Read more →]

Over the past few months, we have seen NYSE Euronext assemble a team of partners with which it will build its next generation infrastructure in and between New York and London.  One big unnamed piece in that team until today was where they were getting the fiber.  The fiber routes are critical because of NYSE Euronext’s desire to drive out every microsecond of latency possible.  With yesterday’s PR it is now clear that they are getting it in large part from metro fiber specialist abvt. [Read more →]

DWDM specialist Infinera (NASDAQ:INFN, news, filings) issued its second quarter earnings today after the bell.  Revenues of $68.9M and earnings per share of $0.19 seem essentially inline with expectations going in.  Of course, the stock tumbled prior to earnings after an analyst report indicated that the company may have lost some part of its Level 3 business to Huawei.  Guidance was therefore critical:  would the company’s revenue recovery be hurt by this news? [Read more →]

Over the past few months there have been several attempts to quantify YouTube’s business model, with very different results.  The main point of contention has been simply “how much money do they lose?”  Today, YouTube fought back on its Biz Blog  with a myth-busting post, taking 5 points and addressing each with a few sentences.  As inspiration they used MythBusters, the television program where two guys try to debunk urban myths by actually reproducing them.  Did YouTube succeed? [Read more →]

The dismemberment of Nortel continues at a brisk pace.  Today the Canadian based equipment maker announced it has found a buyer for its Enterprise solutions business, which makes phone systems for office use.  Avaya will buy the EMEA portion in an asset sale for $475M.  The company will also become the stalking horse bidder on the American (North and South) portion.  Strictly speaking, that means that there will be an auction and Avaya gets to bid first, but they can be outbid.  [Read more →]

Yes, according to the event calendar it’s time for another dose of financial reality in the internet infrastructure and telecom sectors.  Because earnings are a lagging indicator, actual second quarter results seem likely to remain relatively dismal and the story there will be how well the recession has been managed.  What everyone will be looking for is signs of life in guidance for the second half of the year.  Will the purse strings loosen up a bit?  With that in mind, we will hear on Tuesday from [Read more →]

A few weeks ago, the federal government chose a definition for broadband in the context of the stimulus package and the goal of extending bandwidth to all.  The bar they chose, a minimum of 768kbps down and 200kbps up, has been widely panned as a decade late.  But since then, I’ve been thinking that having such a ‘definition’ in the first place is the ludicrous part.  It just doesn’t make sense to have a single threshold as our goal for every dwelling in the USA.  [Read more →]