Telecom Ramblings

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 →]

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 →]