LVLT - Level 3

[Myth465]

MYTH! Welcome aboard the Level 3 freight train to places where no train has ever traveled! Thanks for sharing! Our boyz including Big Prem will get us to copious cash flows, one day sooner rather than later. There are times when even men like Buffett, have to BELIEVE.  ;D   

 

Try not to fret those free loaders at Akamai as much as some might want you to. It's all in this cult like "management team."   

 

I agree and am excited to be here.

 

Txlaw that is funny. Hopefully this one is just as profitable. The last time I believe we all (Me, TX, and Cardboard) had the same investment it worked out quite well. Now if only we could get you to buy some FBK.

 

[txlaw]

Txlaw that is funny. Hopefully this one is just as profitable. The last time I believe we all (Me, TX, and Cardboard) had the same investment it worked out quite well. Now if only we could get you to buy some FBK.

 

 

As a matter of fact, I have been monitoring the FBK thread, and I just reestablished a position a couple days ago. 

 

So if Cardboard is still on board, hopefully all three of us owning will bring some good luck!

 

 

[Guest ValueCarl]

The Roku STB connection is very interesting indeed. Brker_guy, does this make you happy? And, have you finished solving this "latency" issue so that no ISP will dare "throttle" streams between the freight train delivering content to their stops? 

 

WealthTV’s programming lineup is designed to deliver the ultimate vicarious-living experience, featuring world travel, luxury cars, culinary delights, top fashion, international news, movies and more. Level 3 is supporting delivery of this content from encoded signal acquisition and caching to delivery to the consumer. Leveraging its suite of CDN services, Level 3 is delivering WealthTV’s content to Roku users in high-definition using HTTP adaptive bit rate streaming. WealthTV is also using Level 3’s token authentication and geo-intelligence to ensure the protection of content rights holders and delivery to authorized regions.

 

http://www.level3.com/index.cfm?pageID=491&PR=983

[Guest ValueCarl]

Interesting what Sonic.net's CEO has blogged regarding Roku's streaming capabilities. This smaller ISP in Northern California recently had a nice Google win at Stanford too. 

 

http://corp.sonic.net/ceo/2010/12/01/review-roku-is-the-perfect-streamer/

 

What the Roku does best is stream high quality content like Netflix, Hulu Plus, Pandora, MLB.TV, NHL and many more. Some are free, but Roku’s strength is that it has the best array of commercial streams of any player that I have tried.

 

Roku also offers the most mature interface for Netflix. If you are a Netflix subscriber, Roku offers the best playback experience, and includes capabilities like search, queue management and browsing. Fast forward & rewind are also much better on the Roku than other Netflix playback devices.

 

These are important points — Netflix is currently the dominant OTT content provider, so a great Netflix interface is a big win. Many households have more than one device today that play Netflix today, but because the Roku does it so well, this has made it a favorite in our home.

 

http://corp.sonic.net/ceo/

 

 

SANTA ROSA, CA – December 13th, 2010

 

Sonic.net today announced it has been selected to operate and support the trial fiber-to-the-home network Google is building at Stanford University. This experimental project will test new fiber construction and operation methods, while delivering full gigabit speeds to approximately 850 faculty and staff owned homes on campus.

 

Sonic.net will manage operation of the network, provide customer service and support and perform on-site installation and repair. Sonic.net is Northern California’s leading independent Internet service provider.

[brker_guy]

Carl,

 

Very nice win for us today, and yes, I am happy to see this deal come through our doors via WealthTV.  You guys brought up WDC.  So, I hope I don't sound like a basher here, but I own a WD TV Live Plus at home, but during the holidays, I picked up a Roku XDS because of an online deal I saw.  I have to say that other than a few cooking channels that my wife watches, I am beginning to wonder why we are keeping the cable STB around.  I hate to sound like CEO Jasper, but my Roku box' performance just simply blow the WDC's performance when I do a side by side comparison. 

 

Content-wise, I think the Roku products offer more useful contents for viewers.  This is VERY NICE TO SEE

 

"Sonic.net today announced it has been selected to operate and support the trial fiber-to-the-home network Google is building at Stanford University."

 

Fire up that BSNF train, we are about to roll out! :-) :-)

[brker_guy]

Carl, just wanted to share this with you:

 

http://www.computerworld.com/s/article/9180628/LTE_or_not_WiMax_2_set_to_roll_out_in_2012?source=rss_news

 

"In 2008, video traffic averaged around 13,000 TB per month, or roughly 39% of all mobile traffic. By 2013, video traffic will increase by more than 100 times and will average around 1.3 million TB per month, Cisco projects."

 

I like to repeat my comments that I made in earlier posts. 

Dealing with video is a completely different beast.  There is no other apps that generate more IP traffic than video in term of bits count...

[Myth465]

Carl, just wanted to share this with you:

 

http://www.computerworld.com/s/article/9180628/LTE_or_not_WiMax_2_set_to_roll_out_in_2012?source=rss_news

 

"In 2008, video traffic averaged around 13,000 TB per month, or roughly 39% of all mobile traffic. By 2013, video traffic will increase by more than 100 times and will average around 1.3 million TB per month, Cisco projects."

 

I like to repeat my comments that I made in earlier posts.  

Dealing with video is a completely different beast.  There is no other apps that generate more IP traffic than video in term of bits count...

 

Posts like this make it hard to wait. Really hard.

 

Its like night and day difference, and I know from personal experience. I was talking to a coworker today who was asking what internet to get. I told him just get the cheap AT&T dry loop service, but he said he needed the bandwidth for Netflix and streaming PS3 games. He is pretty Joe Six pack though highly paid. The masses are right around the corner.  $1 or $20. I am just hoping I can get shares for under $2 once I know where things are going.

 

Is there enough existing space to accommodate the growth or will the pipelines be full?

 

Cardboard, its interesting that you are in this one. You are probably more focused on downside than most.

[brker_guy]

Myth, just want to share some stats with you a very good tech person that I know, trust and communicate with.  Take a look at this chart here of this tech person who is on CLWR's $40/Month UNLIMITED plan which he has used so far:

 

http://farm6.static.flickr.com/5260/5391075206_79285a78ca_b.jpg

 

Mind you, this person has no other ISP connection to his home or business.  He used primarily CLWR's service.  It’s truly unlimited for $40. No overages. He often uses my WiMAX service to watch Netflix at night. So far, he has used over 55GB so far this month. 

 

Let’s compare the costs of this CLWR's $40/month (truly unlimited) 6 Mbps service with the slower cellular offerings from AT&T and Verizon:

 

*  On AT&T’s HSPA network, the 55 GB/month usage would cost; $25 for 2GB, then $10 for each additional GB. If the overage were required for 50GB, that’s $500. His cost would be: $25 + $500 = $525/month.

 

*  On Verizon’s (slow) EVDO Rev A tethered service, His 55 GB/month usage would cost; $30 data plan + $20 2GB tethering option ($50 total). If the overage were 50GB, that’s $20 per GB or $1,000. His cost would be: $50 + $1000 = $1050/mo.

 

 

Now, do you see why the telco pigs are at the trough and  cap their users and the MSOs like Comcrook (Oops, I meant Comcast) try to set up a toll booth against LVLT? 

 

One more note, CLWR's uses LVLT to haul all of its IP traffic. 

 

[Guest ValueCarl]

Netflix breaks 20MM subs and paints rosy picture starting Q1, where "the network partner they can rely on" picks up their streams! If only I didn't stop being a degenerate gambler, I wanted to buy this into the close!  ;D

 

By Tiernan Ray

 

Netflix (NFLX) this afternoon reported Q4 revenue below analysts’ estimates, but beat comfortably on the bottom line and reported a Q1 outlook that crushed estimates.

 

Q4 revenue rose 34% to $596 million, missing the average $597.5 million estimate. EPS of 87 cents, however, was well ahead of the average 71-cent estimate.

 

Net subscriber additions were 3.08 million, well ahead of expectations for 2.5 million or so, bringing total subscriber count to 20 million at the end of the year, a 63% increase, year over year. Surprisingly, marketing spend was actually 10% lower this quarter than the prior year.

 

http://blogs.barrons.com/techtraderdaily/2011/01/26/netflix-jumps-6-q1-view-crushes-estimates/?mod=yahoobarrons

[brker_guy]

Carl, now I begin to feel bad for all of those value investors who shorted NFLX... I don't own NFLX anymore, but when I did hold it, I thought they had the perfect business that could do streaming.  I was about 5 years too early in my thought. :-)

 

Shhhh, Carl, let's not ruffle any feather with any of those AKAM believers who still think that AKAM is better off without NFLX...  ;D

 

 

[Myth465]

Thanks for the link brker_guy, my coworker also went with Clear Wire. Interesting data.

[Guest ValueCarl]

Yes, Brker_guy, value curmudgeons by their very nature can be CRUSHED if they're not working from the "inside" out, as opposed to the "outside" in where "growth investors" rule the road! You can smell the guys with their value calculator rules out and ready to exit stage left as soon as this entity realizes their estimates for IV, right on this board, and we haven't even started pounding the pavement yet! Now, I can't say I blame them and I won't say they're wrong, but I will say that the right kind of "growth stocks" can take on a life of their own!

 

We can only keep dreaming towards such a day tied to our (3) shares, once again, my good LVLT friend! 

 

Now, I sure hope that Mr. Ryan is watching those bloggers with their big yappers waxing on about how Akamai pays "quietly" for access in the last mile including payments to Comcast. I think they're itching for an economics lesson based upon full disclosure tied to the opaque, I mean "quiet" payments that this free loader has been capitalizing on for years.   

 

If the internet is going to reach its fullest promise while remaining economically viable, understanding all of these moving parts without exception, is the public's business and in their best interest. imo

 

http://seekingalpha.com/article/248775-take-away-from-fcc-ruling-on-comcast-level-3-dispute-nothing-has-changed?source=qp_article

 

Clearly, cable companies would have to start charging some pretty hefty fees before they become the cheaper option. But even so, that’s not even an issue…

 

The reality is that Comcast is charging Level 3 the same fees it has charged other CDNs for years. Akamai (AKAM), Level 3′s larger competitor, has quietly paid for a long time. And it certainly doesn’t seem to be hurting the $9.18 billion company’s bottom line. In fact, last October, it reported that year-over-year revenue increased by 23%.

 

Level 3′s spat with Comcast doesn’t amount to much in the end. Level 3 can continue appealing to the FCC, but it won’t do any good. The agency is still reeling from a slap it received last April when an appeals court ruled that it didn’t have the authority to stop cable companies from blocking bandwidth-hogging applications.

 

For now – and for the foreseeable future – Level 3 will just have to pay the fees along with its peers. Which is not such a bad deal. Especially when you consider the global content delivery market will soon be worth $4.7 billion.

 

 

[brker_guy]

Carl, my good LVLT friend, I am smiling at myself as I am writing this post because I read it this morning and thought to myself, "This article will turn to shred on the Berkshire chat soon".  Sure enough, here you are posting it...  ;D :D

 

Talk about having common interests...  Well, I have to say that anything I read from that sight Seeking Alpha, I always go and read up on who the contributors are.  That's like as systematic for me as eating breakfast each morning these days...

 

Mr. Moschina there thinks he's the famous Italian Designer named Moschino and wrote on how Netflix invented BILLIONS dollars industry.  I hate to break the bad news to him but streaming technologies have been around since the early 1990s and that in 1998, wireless video streaming started:

 

http://www.stanford.edu/class/ee398b/handouts/lectures/08-VideoOverNetworks.pdf  (Fair Warning: These slides are geeky  :D)

 

http://en.wikipedia.org/wiki/IP_Multimedia_Subsystem

 

http://en.wikipedia.org/wiki/3GPP

 

 

So for a disingenuous brat to put out on piece that praised how Netflix, which started in 1997, invented the streaming business is just plain wrong and misinformation!  Netflix might have exploited streaming technologies to change their business model from a traditional delivery to more of an online delivery is more like it.

 

Then, I went and read up what Investment U is all about.  Look below and note the bold fonts.  So, be careful what you read at Seeking Alpha.  The contributors behave like those fools at FOOL.BOMB!

 

 

It’s a shame, really, that much of what is offered here – at no charge – is not taught in the public schools. Why is it that you can graduate in the top of your high school class and know next to nothing about credit card debt, adjustable-rate mortgages, or 401(k)s?

 

Founded in 1999, the goal of Investment U is to give you impartial, no-nonsense advice on how to build long-lasting wealth.

 

Our mission is to analyze and discuss all the important financial tools at your disposal. And to make sure, too, that you use them effectively to jump-start your net worth, cut your investment costs dramatically, reduce your risk profile and, most importantly, achieve and maintain total financial ...More independence.

 

It’s the latter point that is truly our goal here at Investment U. Because no one has the opportunity to live his life fully if he’s a slave to his job, his financial obligations, or his overhead. Or, worse, if he’s worried he won’t be able to maintain a comfortable retirement… or leave behind some kind of legacy.

 

The essential truth of modern economic life is that money gives you choices. Chief among these is the opportunity to do what you want, where you want, with whom you want. That’s what financial freedom is all about.

 

It’s too bad we don’t discover this at a younger age. But then, it’s never too late to start learning… or to finish our investment education.

 

Over time, the insights and analyses offered by Investment U – delivered daily in our e-letter – can make a dramatic difference in any investor’s net worth and financial security. And you can hardly beat the price…

 

After all, it’s free and you’ll receive this Free report: Why It’s “Mayday” For the Euro… And What You Should Do. Please visit: www.investmentu.com.

 

**The Oxford Club LLC/Investment U and Stansberry & Associates Investment Research are separate companies, and entirely distinct. Their only common thread is a shared parent company, Agora Inc. Agora Inc. was named in the suit by the SEC and was exonerated by the court, and thus dropped from the case. Stansberry & Associates was found civilly liable for a matter that dealt with one writer's report on a company. The action was not a criminal matter.

[Myth465]

http://www.tradingmarkets.com/news/stock-alert/lvlt_level-3-unveils-private-debt-for-debt-exchange-1448688.html

[Guest ValueCarl]

(3) expands towards direct enterprise sales in Europe. Rob Powell does a fine job explaining in addition to hosting an interesting interview with Zayo's CEO, Dan Caruso, an Italian pioneer and internet explorer in locating and building internet communications lines across America.

 

http://www.telecomramblings.com/  

[zarley]

http://www.tradingmarkets.com/news/stock-alert/lvlt_level-3-unveils-private-debt-for-debt-exchange-1448688.html

 

This is great and all, but they have such a menagerie of debt issues (convertable and not) that it's kind of hard for me to figure out if this means anything good for them.  They get rid of some shorter duration convertables for some longer duration non-convertables with a double digit interest rate.  That may be good for the shareholder because it reduces the future dillution potential, but costs more for ongoing interest expense.

 

At the 50,000 foot level, I get the Level 3 story, and all of the tech momentum that is moving in their direction.  But, I don't understand (1) how they convert capacity in to profits or (2) how the holders of the common fare in the meantime in the face of potential dillution.

 

I get tempted by Level 3 (Netflix business FTW!!!), but then I look at the financials and the above questions and immediately slot it in the "too hard" pile.  I'm fighting the urge to buy a small position as a gamble on the great upside story.  Right now "I don't really understand it" is winning the fight against "the long-term demand for their services is huge."

[Myth465]

These guys are magicians and the CFO needs a medal. As far as I can tell its a race against time, you need to continue to push the debt out and avoid dilution until the pipes are filled.

 

Its been a 10 year old story, but everyone knows they will mint money once capacity passes some magic number and prices firm. We know bandwidth usage is going thru the roof due to video demand.

 

The key is figuring out how this relates to capacity and how this bandwidth will be converted into cash flow. More importantly when. Who ever can figure that out and buy 6months to 9months ahead will have a 10 banger on their hands. The trick is will it be in 2012, 2014, or 2019, and will it happen prior to another disruptive technology coming in.

 

Ultimately I have the same questions and one of these days will invest the time (Qs, Ks, and presentations) in hopes of getting answers. All directions point toward growth - Cisco, WDC, Facebook, Microsoft though. As I said getting in at $2 or $3 after the turn wont be so bad, but $1.26 is even better.

 

A lot of questions but this is definitely worth watching. One day I hope it will all click and I buy. Hopefully prior to a big stock move. Until then I will be watching.

[Guest ValueCarl]

Yup, from fifty thousand feet high, I have always tried to think about "discounting" the potential for one trillion dollars in high margin revenues, assuming all pipes were full at today's prices! Refer to Jim Crowe's cdn presentation previously distributed to this board. Of course, that's too big of a pile of cache, and damn "hard" to calculate on the come!  ;D 

 

Just keep waiting for the low prices where great wealth ensues because they're easy to "catch" on Wall Street! 

[Guest longinvestor]

These guys are magicians and the CFO needs a medal. As far as I can tell its a race against time, you need to continue to push the debt out and avoid dilution until the pipes are filled.

The elephant in the room is actually the unflinching backing of SEAM and lately FFH. (3) is truly indebted (pun intended) to SEAM for providing capital as & when required along the way, as we watched everyone else back away, including WEB. Some will remember bank covenants etc hanging like a sword over (3)'s necks some 8 years ago, threatening their air supply. (3) and us minority equity holders owe it to SEAM's patience with this. If it works out after all, this kind of patience SEAM has shown with (3) will be an unparalleled lesson in value investing. Sure, they have made a bundle on the debt but who knows what may have happened if SEAM had not stepped forward many times. Actually, we  do know, after all there were 30 or so "also rans" of the dot com era telecoms. Now there are what, 5 to 10?

 

It is not unreasonable to think that FFH was influenced by SEAM to get into the (3) act. And with what great timing, that only folks like Prem can do. That greatly reinforced my own faith in this investment overcoming the doubting tom in me. Oh btw, I am not one of those poor souls who bought at $132, or $ 60 or $ 10 or $ 5, lest someone here who is testing the waters with (3) is looking to dispense paternalism, sympathy or something else ::) Besides the much needed numbers posted each quarter, I will be looking for another value investing stalwart or two to get into the (3) act. Thornburg has been at it, but I am looking for the >20% kind of holding. Or, of course, the "all in" variety.

[Guest ValueCarl]

LI, are you sure about Thornberg? Whilst measuring their SEC filing yesterday, tied to their Nasdaq September 30th, prior position, I found them to have lightened more than one million shares.  ???

 

http://www.sec.gov/Archives/edgar/data/794323/000114036111003957/doc1.htm

 

http://www.nasdaq.com/asp/holdings.asp?symbol=LVLT&selected=LVLT&FormType=Institutional

[Guest longinvestor]

LI, are you sure about Thornberg? Whilst measuring their SEC filing yesterday, tied to their Nasdaq September 30th, prior position, I found them to have lightened more than one million shares.  ???

http://www.sec.gov/Archives/edgar/data/794323/000114036111003957/doc1.htm

http://www.nasdaq.com/asp/holdings.asp?symbol=LVLT&selected=LVLT&FormType=Institutional

 

Re-read the filings. They increased their position from 50 million shares to 88 million shares (+37%) as reported on Sept 30. That makes them a 5% owner of (3). And your edgar filing of Dec 31 shows them owning 87 million shares, still a 5% owner, so what is your point?

[Guest ValueCarl]

The same point as you, I think. Although still a five percent owner, they decreased their position by more than one million shares quarter over quarter, yes? tia

[Guest ValueCarl]

Nice chart depicting the quality of streams being offered by Netflix ISP's after market. For all of its gouging, Comcast remains second rather than first in US quality of stream, if I am not going color blind yet.

 

 

http://techblog.netflix.com/

[brker_guy]

Carl, this is FASCINATING!  From their blog, it seems to me that they are deploying an MPEG-4 Profile Level 2 and using variable bit rate encoding:

 

Currently, our top HD streams are about 4800 kilobits per second. Clients may switch through a number of bitrates as they ramp up to the highest stream, or shift down from the highest stream if they cannot sustain play at that rate due to throughput constraints. No client would sustain a 4800 stream from start to finish (there would at least be a few smaller streams averaged in for startup) but the higher the sustained average, the greater the throughput the client can achieve, and the greater the image quality over the duration of the play.

 

http://en.wikipedia.org/wiki/H.264/MPEG-4_AVC

 

 

So, until the last miles guys open up their pipes, it will be a long while before they hit FullHD.  At that bitrate they are streaming, they should be calling their offering, "SD streams", not HD streams.  ;D

 

[Guest ValueCarl]

I don't know about you, Brker_guy, but that smells like a LAWSUIT based upon the misrepresentation being laid on all of their important "customers" in cable, telecom or other lands. A major class action suit against the WHOLE LOT of them should be forthcoming! For the record, by the way, as a general rule, I hate SUING! If only, I mean, "Can't we all get along?"  ;)