Sea Change at Cogent?

May 15th, 2008

In Cogent Communication’s latest earnings release and conference call lies an indication that their multi-year bandwidth honeymoon may be in danger. Specifically, they reported that traffic growth in Q1 was only 7% above that of Q4, and nearly all of that was in January, with February and March almost flat. They then mentioned that April’s sequential traffic growth was also about 1%, although they expect traffic to continue to grow through the year.

[


The story of XO: What does Icahn want?

May 14th, 2008

Perhaps the most puzzling situation amongst carriers right now is the behavior of XO, which BearOnBusiness described recently as ‘reckless’. XO has great assets – an IRU for 18 fibers on the original LVLT network, substantial metro assets connecting 3000 on-net buildings, and piles of LMDS and microwave spectrum. And yet, their stock is off 90% in the past year. That’s worse than Level 3, which had a simply horrible year as integration blunders decimated revenue growth, it may be the worst in the sector. And yet, XO is basically in the same position today that they were in last year, at least from a competitive standpoint – weak but holding steady. But XO’s common stock, it turns out, moves almost completely independently from its fundamental performance. What drives it? Carl Icahn. [Read more →]


The blogosphere really does have a Welcome Wagon

May 14th, 2008

In the past three days, Dan Caruso’s BearOnBusiness, Ike Elliott’s Telecosm, and Nyquist Capital’s blog have not only linked to this blog, but have posted about it. I must say, the welcome wagon isn’t sleeping on the job, this page has only been around for a few days now! Let me say that I read Telecosm and BearOnBusiness religiously and I have found them to be fantastic commentary on the telecom sector, in fact their presence is part of what inspired me to toss my own hat into the ring. I have run into Nyquist Capital many times as well, and have now added them to my daily reading list. Thanks guys! I’ll do my best to live up to the billing.

1 Comment

Level 3 Debt Worksheet

May 13th, 2008

This is another in a series of modeling and compiled information posts, which I intend to update over time and refer to in posts.

Because LVLT’s debt is a major (if not all-encompassing) feature of its balance sheet, and because so many financial moves the company makes relate to its structure, it is worth keeping track of in some detail.

[

Leave a Comment

On-net buildings, the SME, and strategy

May 12th, 2008

The media tends to portray the CLEC strategy as monolithic, each player has a certain amount of fiber and leases the rest via special access from the ILEC. But it is quite interesting just how wide ranging the various strategies out there are.

[


Target: the virtuous circle

May 10th, 2008

The virtuous circle awaits Level 3, if they can only stop tripping over their own feet and get there. A virtuous circle is a pattern that reinforces itself in a feedback loop. If Level 3 can generate positive cashflow, then their stock will go above the strike price of some of their convertible debt and they can force or induce an early conversion. The interest saved then increases their cashflow, raises the stock further, and more converts can be eliminated, and so on up the ladder. So where are the rungs on this ladder? They are spaced out over the next 27 months. [Read more →]


LVLT growth model

May 7th, 2008

As my inaugural post, I am providing my detailed model of LVLT revenues, costs, earnings, and cashflow. It is a multi-page spreadsheet, and is more comprehensive than anything I find in analyst reports etc. I don’t claim perfection, if you find an error or have a suggestion for improvement please let me know.

My model allows the study of each business unit independently, calculating the total gross margin from the individual components. For historical data, I work backwards from the actual results using various assumptions in order to give a consistent context to the same numbers going forward. [Read more →]