Telecom Ramblings

Over on Telecom Straight Shooter, Dave Rusin has a fantastic post about how little Wall Street understands the telecom business.  I’d call it a rant if his aim weren’t so deadly accurate, it is very much worth reading  His sentiment echos some I have received on this blog from readers, such as Anthony’s comment today:  many of the depressing macro trends we hear about – gas prices rising, companies looking to cut spending – they tend to benefit telecom, not hurt it. [Read more →]

Earnings season has already shown us one thing:  there is no recession anywhere near the datacenter.  First Equinix raised guidance last week, then yesterday both Savvis and Switch & Data reported revenues above expectations, and Switch & Data increased guidance as well.  Growth rates for colocation seem to be at least 30% across the board, with no slowdown in sight.  [Read more →]

Dan Rayburn reports that CDN pricing was essentially stable this quarter.  That is certainly good news for the CDN’s out there, since if traffic grows but the price does not fall, healthy revenue growth must follow.  Yet in parallel, Raymond James reduced its estimates of Akamai’s (AKAM) growth on the grounds of increasing pricing pressure from Level 3 (LVLT), saying also that Limelight’s (LLNW) growth is at even greater risk.  Which is it? [Read more →]

Savvis reports earnings after the market close today, so it is time to quickly look at expectations for the quarter in light of Equinix’s nice results.  Savvis has been hammered repeatedly over the past year, most recently in April when they reduced guidance substantially across the board.  Frankly, they were guilty of some very rosy projections in February and they got punished for it.  [Read more →]

In an interesting partnership, Internap will be opening a CDN POP in Mumbai, India, presumably with Reliance’s aid, and Reliance Globalcom will be reselling CDN services ‘powered by Internap’.  [Read more →]

Well, I went through the exercise of working out XO’s new capital structure, as compared with the old one: [Read more →]

Was there ever any doubt?  XO Communications has finally refinanced its debt, and it did so almost entirely through its majority owner Carl Icahn.  They did so by issuing huge piles of two kinds of preferred stock amounting to $780M.  Of course, they are offering to issue another $39M to the larger minority shareholders, throwing them a bone I guess. [Read more →]

Alright, here’s the updated model with actual results versus my expectations. It was an interesting quarter and a good one at that – all things considered.

Revenues: Adjusted CNS grew app. 2% Q108-Q208 after being essentially flat from Q407 – Q108. Furthermore, [Read more →]

After various stops and starts, Vonage has finally found someone to loan them the money to refinance their debt – they must do this by December or go belly up. Ike Elliott, who follows Vonage more carefully than I do, has a nice writeup on the financing. To put it bluntly, it is very, very expensive money. When someone raises debt at a floating rate of 15% with this many restrictive financial covenants, it generally means the bank has them by the balls and this case is no different. [Read more →]

Light Reading reports that AT&T has filed a complaint with the FCC, alleging that the Sprint/Clearwire deal should be declined.  That’s right, you heard correctly.  An incumbent, which enjoys monopoly status in half the country and which has brought the entire USA telecom industry into a near duopoly alongside Verizon via massive M&A’s, is complaining [Read more →]

Last month, in my series on lit buildings, Optimum Lightpath showed up as the most densely connected alternative metro fiber provider out there.  Of course, being focused on New York City and its suburbs – the most densely populated area in the country – makes that density possible, but nevertheless I had never really noticed this division of Cablevision  until then.  Well last week they made a move, [Read more →]

Level 3 common went up 20% prior to earnings, and is giving about half of that back today.  Traders will be traders, big deal.

The important thing for Level 3 is that they finally got past a major hurdle.  They got operations under control, not in words but in action.  [Read more →]

Level 3 (LVLT) reported earnings today, and as with AT&T and Equinix yesterday, the verdict is a good one.  The company reported EBITDA of $251M, well above wall street predictions, and core revenue of $972M which was pretty much in-line.  [Read more →]

Equinix reported earnings today, beating Q2 guidance and raising their full year estimates for both revenue and EBITDA.  Again.  After all, they just did that in April.  As mentioned earlier on this blog, Equinix was the first pure internet infrastructure player to report and their results could give us a glimpse of the extent to which this sector is being hurt by the economy.  Well, Equinix shrugged off the macro trends without slowing down.  [Read more →]

AT&T reported earnings today, and investors seem to like the results initially.  What always strikes me when I read their earnings releases is just how dependent they are on their wireless division.  What almost happened this time is that the segment income from wireless ($3.0B) very nearly passed that of wireline ($3.1B) on two thirds of the revenue base.  [Read more →]

Level 3 (LVLT) reports earnings on Thursday, so here is a quick primer on what to expect.  For more detailed thoughts, models from both thejuice and myself were posted to this blog.  Level 3 does not provide quarterly guidance anymore, so expectations are a bit harder to define.  Overall, expectations seem to be that ebitda will improve, that that improvement will be mostly due to cost savings.  Everyone will be looking for [Read more →]

Today Level 3 finally put up a nice CDN win: Funcom, as the exclusive CDN provider for the Age of Conan Hyborian Adventures online game . Of course, amongst most non-gamers, the first question was ‘Funcom who?’, but in the gaming world the Conan launch has been big news.  It has a lot (700k) of initial users and a great start, and Funcom clearly hopes to be the next World of Warcraft smash hit, but it is still early in its lifespan.  But from a telecom perspective, how bandwidth and CDNs work for gaming is a bit different than how it works for streaming or website acceleration, so I thought I’d at least try to clear some things up. [Read more →]

As a followup to my thoughts on that WebHostingTalk poll, consider the top 4 in that poll:  Level 3, Internap, AT&T, and Savvis.   These companies have something in common, the first three are recent entrants into the CDN space, and the fourth had a CDN until last year.  In fact, the first three are the only networks with a CDN offering.  [Read more →]

There is a poll on WebHostingTalk on the question “Which network is the best for US based customers,”  and I think the results have something to tell us.  But, as often happens with polls, what it can tell us has less to do with the question being polled than it does with the people being asked.  Being polled are the denizens of WebHostingTalk, i.e. webhosts, colo providers, and website developers – the people who have actually been on the inside of a datacenter.  And by network, they mean IP transit only.
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One of the first internet infrastructure companies to report earnings will be Equinix on Wednesday.  Nortia Research has a nice writeup of the financials and expectations on the company, it is worth a read.  I think it may be smart to pay attention to what Equinix says this quarter, because they represent one of the few bright lights out there given that they have largely maintained their valuation in a very tough environment.  [Read more →]

As the internet becomes more and more central to society, it seems that threats to its health spring out of the woodwork in increasing numbers.  Earthquakes at choke points such as what happened off Taiwan 18 months ago, uncontrolled explosions in traffic from video, malicious botnets run by international criminals or even countries, and now…. complexity.  [Read more →]

Ike Elliott posted a nice summary of Skype’s financial progress the other day, I recommend a look.  Reading through it I was struck by the size of Skype’s business these days.  It seems that this year they should have around $550M in revenue, of the non-cable voip players only Vonage is bigger.  I myself have used Skype a great deal, but only rarely for paid services. [Read more →]

The FCC has been promising to ‘fix’ intercarrier compensation since the 90s, but they have a court-imposed deadline of November of this year.  Does anyone actually believe it?  There is a quote from The Princess Bride by Inigo to Vizzini:  “You keep using that word.  I don’t think it means what you think it means”, and it applies here.  A deadline isn’t a deadline if you have already pushed it back by about a decade.  [Read more →]