Telecom Ramblings

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 →]

Does MagicJack have a femtocell about to launch?  Really?  In a comment on Telephony Online by founder Dan Borislow, it appears they are “putting the finishing touches” on a femtocell product.  It’s not the first mention of the product either, last May they said they were working on such a thing.  I have, of course, been skeptical of the company’s claims in the past, but I cannot deny that they continue to shake things up in the VoIP world.  But a MagicJack femtocell would make that pale in comparison, because until now the company has spent its time repackaging old technology in a masterful marketing shell.  [Read more →]

Charter Communications (NASDAQ:CHTR, news, filings), the fourth largest cable company in the US, is looking more and more like the next casualty of the recession.  The company has long been burdened by a debt load of over $20B, and has teetered on the precipice before yet through perseverance, creativity, and some very favorable credit markets has survived.  This time, however, they seem to have dramatically fewer options.  The credit crisis makes it increasingly difficult to see how they can pay the $1.9B in principle that comes due in 19 months. [Read more →]

I have been asked several times now for a comment on the broadband stimulus that is floating through Congress right now.  I must admit, I’ve been thinking about it and trying to write a post on the subject for a week.  Why so difficult?  Because I have very mixed feelings on the subject.  On the one hand I’d love to see more money spent in the sector, but I also don’t generally trust the government to spend it well.  The debate everywhere is about how much is enough, but how can we answer that if nobody is clear on what we are really trying to accomplish?  There are various [Read more →]

On Thursday, internet router giant Juniper Networks (NASDAQ:JNPR, news, filings) reported preliminary Q4 earnings. As with all telecom equipment makers, the effects of the economic crisis are front and center because of draconian capex cutbacks. Internet traffic may be growing steadily, but carriers and service providers have a good deal of leeway in the timing of their purchases to meet such demand and believe me they are going to use it.  Hence, I wasn’t the least bit surprised to see Juniper check in with [Read more →]

Internap Network Services (NASDAQ:INAP, news, filings) has announced they are bringing in Eric Cooney as its new CEO and President, and named him to the board of directors. Cooney, most recently president and CEO of TANDBERG Television, will be replacing outgoing CEO James DeBlasio.  The transition to the new leadership will be on March 16.  One might chalk this up to stresses from the economic crisis, but that wouldn’t be correct. [Read more →]

Optical provider Infinera (NASDAQ:INFN, news, filings) offered us a glimpse into the telecom equipment sector today as they reported Q4 2008 earnings.  Optical equipment companies get hit hard when recessions strike because they are very sensitive to carrier capex levels.  Adjusted GAAP revenues of $86.2M was far in excess of analyst estimates of $75.5M, and surprisingly up from Q3’s $80.9M.  Gross margins, however fell from 40.8% in Q3 to 34.6%, and EPS turned negative to $-0.07.  In a separate release, Infinera announced that OTEGlobe, the international arm of [Read more →]

Until now Comcast has taken the lead amongst cable companies seeking to rein in P2P and other traffic they have seen as deleterious to the health of their networks.  But now Cox Communications has announced its network management plans, and their effort seems to be more aggressive than the watered down version that Comcast retreated to in September.  What Cox wants to do is categorize traffic as time-sensitive and non-time-sensitive.  When the network is congested, they slow down the latter.  When the network is not congested, nothing happens. [Read more →]

One month after q disconnected SkyWi in a billing dispute, they seem to be at it again.  In late December, Qwest cut its connections to the fixed wireless provider claiming non-payment of some $1.7M that was tied up in a legal dispute.  The New Mexico PRC stepped into the fray within days, ordering them to reconnect within 48 hours.  Of course, it took about a week to get everything back to normal, and the PRC scolded both for letting things get this far.   Qwest said delays in reconnecting were caused by [Read more →]