Telecom Ramblings

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 →]

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 →]