Telecom Ramblings

In their Q4 earnings conference call last week, q announced that they will deploy metro fiber rings in six new markets outside their home region, hoping to “improve their out-of-region cost structure and competitive position.”  No kidding, Qwest has always lacked sufficient on/off ramps outside its home turf, it was a strategic mistake that originated back in the bubble that has weighed on the non-RBOC part of the company ever since. Qwest says the move is “a little bit of offense, and a little bit of defense”. [Read more →]

It’s annual report card time for me, so here are a few thoughts re Q408 as well a look at full year numbers versus my expectations. Q109 and FY09 model update will come later (although I did say that I thought 1050 to 1150 was a good conservative ebitdas range for FY09 prior to the Q408 con-call, so I think I’m starting off in relatively the right place). [Read more →]

Cable MSO Charter Communications (NASDAQ:CHTR, news, filings) finally cried uncle yesterday, coming to an agreement with its debt holders to restructure its debt load through a prepackaged bankruptcy. The company’s future had been looking quite dim lately, at least for common shareholders, due to the frozen credit markets and Charter’s coming debt maturities.

In the agreed upon deal which involves a Chapter 11 bankruptcy filing by April, [Read more →]

It’s been a busy earnings week.  Yesterday datacenter specialist Equinix (NASDAQ:EQIX, news, filings) reported earnings, with fourth quarter revenues of $190.7M inline with guidance and adjusted EBITDA of $84.1M which was a little better than guidance.  Diluted net income per share of $2.74 was inline with expectations.  However, the company reduced its revenue projections slightly for 2009, to $855M-875M from their original projection or $870M-892M in October.  This still represents 23% growth during a [Read more →]

Tata Communications (news, filings), the telecom arm of the Indian conglomerate Tata Group,  announced today a $430 investment plan in the Asia-Pacific region.  The plans two key features are a new ‘flagship’ datacenter in Singapore called the Tata Communications Exchange, and further development of its TGN-Intra-Asia undersea cable system, hooking up Singapore, Hong Kong, Japan and also Vietnam and the Phillipines.  Tata’s TGN cable systems began [Read more →]

Colocation facility specialist Dupont Fabros Technology (NYSE:DFT, news, filings) managed to find a crack in the credit markets this week, raising a total of $180M. That was enough to pay off a $135.1M construction loan, clearing up near term balance sheet issues. This will allow them to restart the development of their ACC5 facility in Ashburn VA, completion is now anticipated in the third quarter.  Construction remains halted at its Piscataway NJ and Santa Clara CA sites I suppose, but it’s the first step back to [Read more →]

Telecommunications carrier Level 3 Communications (NYSE:LVLT, news, filings) reported earnings this morning, with mixed results.  They reported a profit of $0.03, something that doesn’t happen every day, but of course this was mostly due to one time benefits.  The fingerprint of the recession was clear  however, the company’s revenues were hit by unfavorable foreign currency exchange by $14M over the third quarter.  That’s enough to raise some eyebrows, currency fluctuations are something my models do not handle yet so this did catch me off guard, although in hindsight the troubles in the UK were clear enough.  EBITDA, when adjusted for all the one time items, was $271M.  My projection of $260 included a $12M charge for severance, it would have been $272 otherwise and was actually very close.  The positive free cash flow of $124M was [Read more →]

According to a reliable source from within metro and regional fiber operator Zayo Group , the company has again defied the credit crisis and raised a significant amount of new capital.  This is the second time the company has raised money during the teeth of the recession, they added 35M at the end of September apparently as a cushion for the impending recession.  Any money raised now is surely expensive money, valuations are very low and available interest rates for corporate debt are high even for large profitable companies.  Supposedly, the money is not slated for day to day operations, their balance sheet is in good shape.  That of course raises the question:  then what is it for? [Read more →]

Here’s my model prior to the call tomorrow.  Essentially I’m looking at 265 in ebitdas and 100M of FCF, no earnings of course.  My data is not much different from Rob’s except in that I’m a bit more optimistic on the wholesale voice area and perhaps in working capital (which is a total crap shoot and an area I have been way wrong on for each q).  I expect they will say they will be FCF for all of 2009 as their ebitdas margins should [Read more →]

TW Telecom (NASDAQ:TWTC, news, filings) reported Q4 and full year 2008 earnings yesterday, and lo and behold the sky didn’t fall there either. In fact, the company managed to grow revenues sequentially to $294.6M, up $3M in the fourth quarter despite the economic headwinds. Revenue growth came almost entirely from Data and Internet Services. EBITDA of $104.2M was also up sequentially, with modified EBITDA margins increasing again to 35.4%. Earnings per share of $0.03 showed no deterioration either. [Read more →]

It’s almost that time again for followers of Level 3 Communications (NYSE:LVLT, news, filings), since the company reports earnings tomorrow.  What should we expect, looking into the teeth of a recession?  If the rest of the sector so far is any indication, the story will almost certainly be that Q4 wasn’t disastrous, and that guidance for 2009 will be disappointing.  My model for Level 3’s operations is of limited value under these economic conditions, because the effects of the macroeconomic environment are a real wildcard and affect each of the company’s segments differently.  But of course, that won’t stop me from trying, so without further ado: [Read more →]

Contentinople reports today that glbc is the latest carrier looking to enter the CDN business, according to a Yankee Group report on the subject.  Supposedly, rather than build their own, buy someone else’s, or partner their way in, Global Crossing is planning to simply resell CDN services from several carriers.  The first lucky CDN is Edgecast, which has had quite a run as a wholesaler after deals with both Deutsche Telecom AG (ETR:DTE, news, filings) and Navisite (NASDAQ:NAVI, news, filings) [a subsidiary of Time Warner Cable (NYSE:TWC, news)] .  Global Crossing could be a powerful reseller for CDN services outside the US, leveraging [Read more →]

Did you ever wonder what makes the businesses based on longhaul and metro fiber so different?  If you read blogs like this one, you know that there is a big difference in the economics.  The prices you pay for metro access at the bit-per-mile level are much higher within a metro area than from one to another. But why?  I have to admit that when asked this question in the past I have not answered it particularly well, and they say one doesn’t fully understand something if they can’t put it into simple terms.  So a few days ago when [Read more →]

Colocation and IT services specialist Terremark (news, filings) [a subsidiary of Verizon (NYSE:VZ, news, filings)] reported earnings yesterday, and the results were solid.  Revenues of $65.9M were up 11% sequentially and 32% over the same period last year, meeting guidance despite the worsening economy.  EBITDA of $18.4M was above guidance, resulting primarily from better than [Read more →]

In an SEC filing yesterday, CDN upstart Limelight Networks (NASDAQ:LLNW, news, filings) revealed that they have entered into a substantial contract with international telecommunications carrier glbc for wavelengths. The deal comes as an amendment to an existing relationship and consists of a four year term with a substantial prepayment – i.e. some form of IRU. The capacity will cover routes between up to twenty cities in the US and Europe and include 40Gbps on certain routes. No doubt this represents the connectivity between Limelight’s major CDN nodes. [Read more →]

Telecom Ramblings has become large enough that I now get quite a few emails with press information, offering me material for posts in the event of writer’s block. One of them today came from what I thought of as an unlikely source: the National Science Foundation. It was about the surveillance system used to simulataneously monitor live feeds from large numbers of wireless cameras at Obama’s Inauguration. The system used by law enforcement was an adaptation of [Read more →]

It’s becoming a broken record of sorts: telecom equipment makers are suffering from the recession and draconian cutbacks in carrier capex. It is therefore no surprise that Cisco Systems (NASDAQ:CSCO, news, filings) is feeling the pain. The company reported a solid fiscal Q2, with revenues of $9.1B and earnings per share of $0.32 excluding certain charges. Neither number was huge, yet both were slightly stronger than expected. [Read more →]

Content distribution giant Akamai (NASDAQ:AKAM, news, filings) issued its earnings report this afternoon, and they just blew past estimates. EBITDA of $100.3M, and normalized EPS(diluted) of $0.44 were all surprises to the upside, well above my own expectations.  Gross Margins of 71.4% showed no deterioration at all.  Revenue of $212.6M included $6.9M from the Acerno acquisition which I had not realized would be so large, but even discounting that [Read more →]

Savvis (news, filings) [a subsidiary of CenturyLink (NYSE:CTL, news, filings)] reported Q4 earnings this morning, and the verdict for the end of 2008 was pretty good. Revenues of $222.4M was above Yahoo’s estimates of $220.2, and up 2% from the third quarter. EBITDA of $52M was quite good, and positive earnings per share of $0.05 came as an unexpected bonus. As one might expect, Savvis’s good results came primarily from a big quarter of $83.2M in colocation revenues, up 6% sequentially and 33% over Q4/2007. Managed hosting was up slightly, and Network services down slightly – largely normal. In the fourth quarter, one could barely [Read more →]

Content delivery giant Akamai (NASDAQ:AKAM, news, filings) reports earnings after the bell today, so let’s take a look at where things stand.  Or at least, where we think they stand given the uncertain environment. The economic crisis is perhaps a bit less scary now than back in October when the financial world was imploding, but that is only because our eyes are now accustomed to the dark – it hasn’t gotten any lighter yet. But for someone like Akamai that has little debt, generates gobs of cash, and operates in a sector that is still growing despite the economy – it’s almost business as usual. They may be under siege [Read more →]

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Last week, the FCC demanded that Comcast (NASDAQ:CMCSA, news, filings) explain why their own VoIP service was immune from their congestion management system, whereas other VoIP traffic was not.  Their answer?  Comcast Digital Voice (CDV) is entirely separate from its High-Speed Internet (HSI), so of course it would not be affected by congestion there.  In fact, you can buy CDV without even buying HSI.  Discrepancy?  What discrepancy? [Read more →]

After years of trying to make standalone, outsourced VoIP into a viable business, Deltathree (OTCBB:DDDC, news, filings) has finally tossed the towel into the ring.  In a transaction announced today, the company will sell common shares giving 54% interest plus a pile of warrants to a buyer for a mere $1.17M.  The buyer is an investment fund called D4 Holdings, which is controlled by the owners of multi-level marketing (MLM) company ACN, Inc.  Precisely what the relationship between ACN and D4 is, I’m not sure, but for now I just think of the buyer as ACN.  ACN itself has a colorful history [Read more →]

Juniper Networks (NASDAQ:JNPR, news, filings) announced its TX Matrix Plus multi-chassis core router, and the big buzzphrase that surrounded it with great fanfare is virtualization.  By bringing virtualization to the world of routing, Juniper hopes to give its customers the kinds of benefits that virtualization has brought to the processing end of the datacenter business.  Juniper is not the only one thinking along these lines, Cisco Systems (NASDAQ:CSCO, news, filings) is there also.    But what does it really mean?  That’s a lot less clear to me right now, because it’s not at a stage where we can link [Read more →]