LVLT - Level 3

[brker_guy]

"Please be specific with your estimates on how much revenue in year one, as well as the three aggregate years this new netflix contract may represent?"

 

I will take a whack at this, but you can monitor what Dan Rayburn write about on this.  I think Dan has a very good beat on the industry.  Let's just focus on the "video delivery network" only.  Let's call that VDN.  I don't think it's wise to be convoluting CDN with VDN.  I think, in 2008, the VDN market was about $400MIL?  I think it will be somewhere around $500-$600MIL this year.

 

Let's say it it costs NFLX $0.03 per GB for video delivery okay?(bc LVLT's network is good and reliable, and NFLX would want to pay up for that).  So, each movie, it costs NFLX about $0.15/movie($0.03 *5GB per movie).  In an earlier thread, we estimated that roughly 80% of NFLX subscriber do streaming.  So, that's 16MM subs.  IF all 16MMsubs stream a movie each month, LVLT gets about $2.4MIL per month.  So, that would be $28.8MIL per year.  However, this is my  most optimistic scenario for year one.

 

Let's say that NFLX pays $0.02 per GB for video delivery as the worst case  okay?(bc everyone thinks that LVLT's cutting prices to compete with AKAM).  In this scenario, LVLT would do about $19.2MIL per yr in the first year.  This is my low end estimate.

 

Then, you would add about 5% subscriptions growth to NFLX.  I would say that in 3 years, LVLT would add $60 to $90MIL to its top line.  So, does that justify making the $14MIL investment in CapEx?  I would say so!

 

 

[brker_guy]

Carl, pls keep in mind one more thing.  My estimate for each movie size of 5GB are for non-HD movies.  HD movies are about anywhere from 12GB to 20GB in size.  So, streaming HD movies will cost more to NFLX.

 

 

[Guest ValueCarl]

What cdn, or to use your term vdn-I agree-revenue base are you working from?

 

How many traditional enterprise cdn's(large & medium representing (3)'s target) do you anticipate turning into vdn's as we fast forward? What addressable market "might" that become? tia 

[benhacker]

Brker Guy, at the rate at which NFLX streams, even in their "high quality mode" I think they are looking at 2Mbps in bandwidth, or a little less than 2GB / movie.  5GB may be right for a typical DVD size, but the compression that NFLX uses brings the data rates down to 0.5 - 2.0Mpbs (little 'b' not big "B") at the end users house.

 

Am I thinking about this right? Or have their increased the rates without me realizing?

 

Ben

[brker_guy]

"What cdn, or to use your term vdn-I agree-revenue base are you working from?"

 

Dan publishes CDN pricing on a quarterly basis.  Would you look at here?  Speaking of the devil (Mr. Rayburn), here is Dan's latest price on CDN (in particularly VDN):

 

http://blog.streamingmedia.com/the_business_of_online_vi/2010/11/q4-cdn-pricing-detailed-down-20-overall-in-2010-should-remain-stable-next-year.html

 

I think if we land HULU outright and get some kind revenue sharing, that would be HUGE for us.  I have been reading A LOT of negative presses on the GoogleTV products.  However, we are only at Rev1.0 of GoogleTV.  I think in the next 2 years, we will be seeing a lot of HiDef streaming video products like GoogleTV.  Then, it will be a HUGE market for (3) because a lot of the content providers will be streaming at HD rate.  Then, you hope and pray that T-Rex and VZ along with the cable monopolists would be having fiber to the house.  Those comments that Crowe made during the earnings CC on special access are very important to note.  By that time, you will DEFINITELY get that hockey stick effect that Mr. Eric Schmidt is fond of for LVLT. :-) :-)  I love the hockey stick effect, don't you?

 

Ben, the 2Mbps that you are referring to is the "encoding" rate. This is a little more technical than I like to talk about here bc this is a stock board after all, but in the video compression world, you want to think of "encoding rate", not compression ratio.  So, at 2Mbps encoding rate, keep in mind you are doing this at 30fps*8bits color*3 color*duration of movie.  You play around with those numbers like reducing frame rate or reducing resolution, but the idea is to get to your target storage size.  There are penalties to be paid if you reduce frame rate or resolution.  Have you ever watch an action adventure movie at 15fps?  Not pretty!!!  In video compression, there is a trade-off to be made for video quality vs. bit rate.  Take your pick!  Can't have the best of both worlds unless you have the BW which we now are about to have.  Hope that helps...

 

 

[Guest ValueCarl]

Yes, Brker_guy, I love hockey stick growth rates! But (3) owners have only been hearing about it rather than experiencing it tied to their free cash flows since the origin of their very expensive infrastructure. To date, all we have gotten inside the brutal hockey rink, have been body slams into the boards along with black eyes and bloody noses.

 

Be more specific with your answer to Ben for all players to hear, please. He seemed to be trivializing your revenue numbers by "compressing" them down to megabits per second at the end user level, versus your GB pricing metrics. Certain Yahooligans have attempted to exploit this math for a long time now as well.

 

Here's the question, in its simplest form, which should require a yes or no answer, because you know Brker_guy, you can talk to me like I'm a child, and I'll understand! After yes or no, you can kick it up to any level you wish, because my mind will then be open for the change.  ;D

 

Is your original math which triggered his question correct, and are you stating last mile ISP's will not be able to throttle nor buff, nor cause latencies on the streams coming from Netflix? That's still very inexpensive compared to their post office charges previously.

 

According to our CFO who felt comfortable feeding the short animals plenty of ammunition, almost as though he was an agent working for them, Netflix share owners chose to partner with (3) because they wanted to make certain their end user experience was best of breed, and nothing short of that! You can see Hastings' yearn to learn, along with his constant concern to give his customers the most optimal internet streaming experience here:

 

http://tech.fortune.cnn.com/2010/11/18/reed-hastings-leader-of-the-pack/      

   

[benhacker]

Ben, the 2Mbps that you are referring to is the "encoding" rate. This is a little more technical than I like to talk about here bc this is a stock board after all, but in the video compression world, you want to think of "encoding rate", not compression ratio.  So, at 2Mbps encoding rate, keep in mind you are doing this at 30fps*8bits color*3 color*duration of movie.  You play around with those numbers like reducing frame rate or reducing resolution, but the idea is to get to your target storage size.  There are penalties to be paid if you reduce frame rate or resolution.  Have you ever watch an action adventure movie at 15fps?  Not pretty!!!  In video compression, there is a trade-off to be made for video quality vs. bit rate.  Take your pick!  Can't have the best of both worlds unless you have the BW which we now are about to have.  Hope that helps...

 

Hey Brker, Thank you for your response.  I'm very familiar with encoding, and what can be done for video compression (my background is in DSP / Communications many moons ago though) but what I don't know or understand is where the raw signal is going through the network vs where the compression is taking place.  My prior understanding is that the encoded rate as you define it (the 2Mpbs number) is the actual data sent across the pipe.  NFLX is doing the compression at their end, and while they make sacrifices to get to that 2Mpbs number (vs the 10 or 20+ Mbps raw number) it's done... so the data going across LVLT's pipe is only 2Mbps.

 

Can you explain or clarify?  I can believe that compression is being done actually in LVLT's network, so that is why I was confused by your comment (if their VDN IS doing the compression, I understand... and stand corrected)... my understanding is that LVLT gets only the encoded stream.

 

Ben

[brker_guy]

Is your original math which triggered his question correct, and are you stating last mile ISP's will not be able to throttle nor buff, nor cause latencies on the streams coming from Netflix?

 

Carl, the simple answer is "no".  As you noticed, I said each movie is about 5GB based on DVD storage.  A long time ago as you might recall when LVLT was starting to get into the CDN business, they used a DVD as their typical movie memory size.  That's where I did that baseline movie size.  What Mr. Hacker is referring to here is video encoding rate.  Video encoding rate is not the same as storage.  While I am at this, let's do some compression 101. Sorry to both of you in advance if this is beneath your intelligence, ok?

 

A typical non-HD video has the following size:  (640 * 480) * 30 frame/sec * 8 bits * 3colors = 221Mbps or 27.6MB/s or 1.66GB/Min or 99.5GB/HR.  This is for a raw, uncompressed video.  Now, what do you do in order for you to get it to a 5GB DVD or an archived file to be streamed?  If you have a 5GB=size disc, that would take you 20 discs to store your video.  Or you would simply compress the video by a factor of 20:1 or otherwise to get to that target size.  That means you have to set the encoder at 500kbps, 2Mbps or even 4Mbps depending on the resolution and the video playback rate you like to have that video playback at.  Quality and users experience is HIGHLY dependent on this encoder rate setting.

 

If your encoding rate is too high, you will choke off the network and go into a major "buffering" scheme.  If your encoding rate is too low, you would get bad video display.  So, take your pick!

 

Ben, regarding your question, "what I don't know or understand is where the raw signal is going through the network vs where the compression is taking place."

 

As you might notice in the LVLT/NXLF PR, it said the following, "In addition to supporting Netflix for streaming movies and TV shows, Level 3 will store the entire Netflix streaming library of more than 20,000 titles. Over the course of November and December, the two companies will move the library to storage with Level 3 in preparation for serving traffic beginning Jan. 1, 2011."

 

This means that NFLX will move a lot of movie contents, host them at LVLT data center and have a lot of encoders sitting right there at these data centers and encode them as people get online and access movies to stream and watch.  Movies are encoded at LVLT's sites and transmit them over their network to the last mile and the users.  Don't forget:  LVLT owns Vyvx!  If anyone who understands the value of video encoding within the fiber network, it's these (3) guys!

 

Also, Ben, this is from my personal and professional experience speaking on this 2Mbps encoding point you are bringing up.  It's because NFLX is encoding their video at 2Mbps is one of the many reasons why they are experiencing technical problems: Craps in, and craps out... (BTW: Glad to know you were a former DSP Comm person.  Part of my thesis was in DSP, but I focused heavily on video. :-))

 

Carl, I forgot to bring this up to your attention.  In the article you shared with us, it said this,

Hastings figured he could offer unlimited streaming at no extra cost. By buying bandwidth in bulk from outfits like AT&T (T) and Verizon (VZ) and then hiring companies like Akamai (AKAM) to help deliver the data efficiently, it is able to stream a movie to customers for an average of 5¢ a film, compared with about $1 in roundtrip mailing and labor fees for a DVD.

 

That's where NFLX got into the second set of troubles.  First, they bought BW from T-Rex and VZ: the two telecoms that are notorious for throttling users.  Then, they would hire AKAM to deliver contents at

5¢ a film

that they encoded.  See my comments just right above on craps in and craps out...

 

My mommy used to have a saying for people like Mr. Hastings' experiment with the T-Rex, VZ and AKAM, "You can either pay now, or pay later because you MUST pay.  There is no short cut on that.  So, get on with it!!!"  I hope this taught NFLX a valuable lesson on the price of trying to be on the cheap...  He's lucky that BBI and Hollywood video are in bankruptcy...

 

[Guest ValueCarl]

Brker_guy, I don't know if you're a daddy or not, but your explanation for any children of (3) is outstanding. I am going to label you, "Father (3) Knows Best," for the purpose of this LVLT subject thread, if you don't mind.

 

A few of thoughts are swirling around in my mind at this time, however.

 

1) How will (3) guarantee QOS to Netflix after their traffic is released to those meddling, throttling, buffering buffoons like Trex, VZ and the cable jerks in the last mile?

 

2) You having brought up Vyvx, LVLT's live venue video distribution business, might require a CSCO explanation with respect to (3)'s pure, unadulterated, "non compressed" video streams to the broadcast studios.  When I first heard CSCO's recent announcement to offer "compressing services" to (3)'s pure signals, I wondered why, and at whose "COST"?

 

3) Did you hear Sunit lay the gauntlet down over the subject of "special access charges" regarding those dinosaurs mentioned in #1 above, and didn't he reference the SEC's involvement in addition to the FCC looking hard into their conduct up until now?    

 

Once again, thanks for being a father (3) knows best surrounding this important phase of the "internet" inclusive of its most "valuable video delivery network(vvdn)."

 

[benhacker]

Thanks Brker guy, appreciate your inputs, I understand better now.

 

Ben

[Guest ValueCarl]

One can only hope extensions of "FOOL LAND" are also included in this deep surface probe. Then there's that Cramer of course!  imo

 

Many huge hedge funds and investors are also involved in the probes, including SAC Capital, Jennison, Citadel, Janus, Wellington, and MFS.  The latter firms are among the most prestigious mutual-fund managers in the country.

One small research firm sent an email to its clients at the above firms that reveals just how aggressive and widespread the probe is:

John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information," the email said. "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

If the charges stemming from this probe have the same scope as the probe, it will shake Wall Street to its core.  Institutional investors have long had access to vastly more information than amateurs, despite encouraging talk of a "level playing field."  If some of these information-gathering practices are now judged to be illegal or risky, it could radically change the institutional money management game.

 

 

Read more: http://www.businessinsider.com/fbi-insider-trading-investigation-2010-11#ixzz15r4HqHno 

[Guest ValueCarl]

As much as anything, I'd like to see that Wolf of Wall Street, Icahn, being carted off in cuffs wearing a spanking new, wool Pea Coat in advance of the NY winter! Being arrested by his side, a couple of his captured, corrupt NY judges would be icing on cake! imo 

 

While it would be easy to take another shot at Goldman for being singled out here, I would venture to say that every firm on Wall Street would be tangled in this net.

 

Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.

 

Are you kidding me? Can you imagine being on the receiving end of this e-mail? How many guys do you think received this message and called Kinnucan via their cell phones or even better via a calling card and said, “What the f&%$ is wrong with you? Get your tech people to take my name off that distribution!!”

 

You can’t make this stuff up. Should Kinnucan be fired for sheer stupidity? Wow!! I am continually amazed at how seemingly intelligent people can be so dense. What did Kinnucan have to say?

 

“Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information,” the email said. “(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman’s gracious offer to wear a wire and therefore ensnare you in their devious web.”

 

Wow. Once again the use of ‘wearing the wire’ is brought into play on Wall Street. Seems like all the trappings of ‘organized activities’ are once again on display. To whom did Kinnucan write?

 

The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management. SAC, Wellington and MFS declined to comment; Janus and Citadel didn’t immediately comment. 

 

http://www.dailymarkets.com/stock/2010/11/20/%E2%80%9Cillegal-insider-trading-is-rampant-and-may-even-be-on-the-rise%E2%80%9D/

[Guest ValueCarl]

Brker_guy, the more I look into this Falcone Financier, the wild speculator whom you had placed a low powered magnifying glass onto recently, the more the probability rises for him to "monetize" that spectrum and walk away from his grandiose plans.

 

Since he's at odds with Clearwire(CLWR), and McCaw, a long term (3) extended partner, I am going to be looking towards his crash landing!

 

If he should blow up the accounts of his global investors, wherever they are domiciled inclusive of "funds of funds" relationships, this will be nothing new in the age old "nation building" enterprise corruption where exploitation of labor is the primary goal of government and their capitalists.

 

At least they shot off the satellite in Kazakhstan though, right? imo

 

(Reuters) - Billionaire money manager Philip Falcone, whose borrowings from his hedge fund have drawn regulatory scrutiny, is also cooperating with "informal investigations" into trading at his Harbinger Capital Partners and related entities, according to a recent regulatory filing.

 

http://www.reuters.com/article/idUSTRE6AH46L20101118   

[brker_guy]

Brker_guy, I don't know if you're a daddy or not, but your explanation for any children of (3) is outstanding. I am going to label you, "Father (3) Knows Best," for the purpose of this LVLT subject thread, if you don't mind.

 

A few of thoughts are swirling around in my mind at this time, however.

1) How will (3) guarantee QOS to Netflix after their traffic is released to those meddling, throttling, buffering buffoons like Trex, VZ and the cable jerks in the last mile?

 

2) You having brought up Vyvx, LVLT's live venue video distribution business, might require a CSCO explanation with respect to (3)'s pure, unadulterated, "non compressed" video streams to the broadcast studios.  When I first heard CSCO's recent announcement to offer "compressing services" to (3)'s pure signals, I wondered why, and at whose "COST"?

 

3) Did you hear Sunit lay the gauntlet down over the subject of "special access charges" regarding those dinosaurs mentioned in #1 above, and didn't he reference the SEC's involvement in addition to the FCC looking hard into their conduct up until now?

 

Carl, thank you very much for the kind praises.  I am just a "(3) Believer".  If you look at it, ever since the tech bubble days, how many (3) executives have been indicted on any kind of financial fraud relating to (3).  They have been up and up, and have been as brutally honest as they can. 

 

You know, I put my experience of being a (3) holder in the following way since I am indeed a father:  Owning (3) is like watching my kid growing up.  You have your good days; you have your bad days.  You just hope the good days will outweigh the bad days in the long run.  Fortunately, (3) have good parents and guardians namely Walter Scott Jr., Crowe, and the rest of their financiers: Watsa, Mason, Thornburg & may be Buffett(via the bonds?).  We have witnessed SO MANY crooks from the tech bubble days(Sullivan, Bernie, Nacchio, Winnick, etc) being indicted and sent off to jails, and their handy works(i.e. their companies) have gone through so many reincarnation.  It's not even funny.  (3) remained strong with their reputation.  So, I feel good about that.  I am hopeful that this (3) "kid" will grow up to be a fine young company!  He might have to go to junior college before he makes to Harvard, Stanford or MIT, but he will be one fine young company. :-) ;-)

 

Now, let me try to answer your questions above without to divulge too much into what my current venture is doing or give any ideas to any options-infused wealth engineer from AKAM, turned Value Investor on here.

 

1)  The value of CDN/VDN innovations these days are in the QoS and network management of IP traffic.  With the invention of H.264 compression algorithm, there is a way to monitor video transmission and know how to adjust for latency and bandwidth shaping from the likes of T-Rex and VZ.  This is known as "scalability".  The idea is to make the video frame rate or the video resolution adapt to bit-rate.  This is extremely useful in the wireless domain.  With all of those assets that (3) has from Savvis/C&W/Exodus, ServeCast and Vyvx.  I am very certain the guys at Vyvx understand this better than anyone.  The beauty of this contract is that (3) controls the "encoding" and the "streaming" of NFLX movie and at the last mile hand-off the movie to the users' ISP.  If the ISPs try to monkey around with their BW to induce latency, (3) can have tools to adjust to this latency.  This is where "science" and "art" meet, and this is the "final frontier" for video and networking.  This is why I am embarking on my current venture with a few buddies...

 

2) Regarding CSCO's offering, it's only logical that they would do that since they own Scientific Atlanta, one of the pioneers in digital video transmission.  Let's take the compression math I laid out to you earlier on non-compressed video.  Now, replace the 640*480 with 1920*1080 and 30fps by 60fps to compute the video encoding rate for HD contents.  That's just from 1 camera.  So, at any sport venue, you got a ton of cameras capturing video at this encoding rate.  Well, what (3) has been saying is that they want to aggregate all of these contents from these cameras and deliver them "raw and uncompressed" via their fiber to maintain "quality" into the studios.  Then, at the studios, there would be arrays of HD encoders compressing these videos for delivering.  Either Vyvx will do this or CSCO will do this.  In a way, CSCO is competing with Vyvx for this business.  With Vyvx, they are part of a company that owns the big fat pipe.  With CSCO, they own the encoding hardware, but with hardware, they depreciate really fast.

 

3)  Yep, I have been hearing a lot of (3) discuss and bring up "special access" up a lot lately.  For one, they would be promoting the "TAP" and the metro assets as their advantage to the content owners.  Or they could be warning the likes to T-Rex to not abuse their position in the last mile.  I think you will see (3) make a very big push to be to a lot closer than 500m from their TAPs and their customers. 

 

I will study all of these info on your links regarding this Falcone Financier scandal and accusation to come up with more comments.  I have been busy with the "honey-dos". :-)

 

[Guest ValueCarl]

The compliment I gave to you is well deserved, Brker_guy! You continue to provide great value to this board. The most positive take away for consumers and business owners to look forward to in the last mile based upon your recent response is this:

 

<If the ISPs try to monkey around with their BW to induce latency, (3) can have tools to adjust to this latency.  This is where "science" and "art" meet, and this is the "final frontier" for video and networking.  This is why I am embarking on my current venture with a few buddies...>

 

Sunit offered many new data points while dealing in extreme truth, apparently, during last week's presentations. Besides alluding to the very small cdn base (3) is building from pre-Netfix($28 million), I heard other things I have never heard before, including something to this effect, assuming my 3K mile internet pipe, along with his Indian accent wasn't playing tricks on my mind or clogging my head with false smoke signals.

 

Besides (3)'s $25B PP&E cost new investments during the past thirteen years-something I have always been a strong proponent of emphasizing-he made a comment that, additionally or "plus" $19B in mergers and acquisitions have been made as part of the prior roll ups which ended circa 06-07.

 

Did you pick up on that too, and what was he really saying because, my estimate for RCV is significantly undervalued depending upon what he was attempting to state?  

 

Excluding the fact that up until now, previous MNA's have been totally destructive on our market cap, there is much lost ground to be made up.

 

As for being Father (3) Knows Best and your Jr. college advice and analogy, I have known gifted kids who have cut Jr. college requirements in "half" accelerating themselves to best of breed institutions as higher class-men during the process.

 

With (3)'s time in the market being so long today, I expect them to SKIP to the head of the class similar to "the speed of light" being carried through their pipes! imo      

 

   

[brker_guy]

Sunit offered many new data points while dealing in extreme truth, apparently, during last week's presentations. Besides alluding to the very small cdn base (3) is building from pre-Netfix($28 million), I heard other things I have never heard before, including something to this effect, assuming my 3K mile internet pipe, along with his Indian accent wasn't playing tricks on my mind or clogging my head with false smoke signals.

 

Besides (3)'s $25B PP&E cost new investments during the past thirteen years-something I have always been a strong proponent of emphasizing-he made a comment that, additionally or "plus" $19B in mergers and acquisitions have been made as part of the prior roll ups which ended circa 06-07.

 

Did you pick up on that too, and what was he really saying because, my estimate for RCV is significantly undervalued depending upon what he was attempting to state?

 

Carl, I might have to re-listen to both presentations again because it was hard for me to listen to Sunit sometimes as well.  The details might have flown over my head that i didn't catch.  I will re-listen to it again later tonight and will have some intelligent things to add.

 

BTW: I got some cool stuffs for you besides that awesome PR from NFLX on their new pricing on their streaming service.  Ka-Ching!  ;D

 

http://www.reuters.com/article/idUSTRE6AG1QY20101117

 

http://www.pcworld.com/businesscenter/article/192658/after_dns_problem_chinese_root_server_is_shut_down.html

 

http://asert.arbornetworks.com/2010/11/china-hijacks-15-of-internet-traffic/

 

http://www.uscc.gov/annual_report/2010/annual_report_full_10.pdf 

(You should start your reading at Chapter 5 and onward)

 

http://www.securityweek.com/chinas-cyber-threat-growing

 

[Guest ValueCarl]

I think this news exposure represents the beginning of Hawkins and Cates moving towards "active" versus idle, or dare I say, passive investors. I'm still waiting for the unrecognized intrinsic value that their "Merchant Man," has attempted to solicit for our Starship Enterprise. There's a hell of a lot of pent up underlying "VALUE" to be realized. With so many options and opportunities and the wind blowing at our back, it's time to hit the cover off the ball!  ;D

 

“We are unhappy with Level 3’s operating results and stock price,” Hawkins and partner Staley Cates said in a third- quarter report to shareholders in their Longleaf Partners Fund, filed Nov. 19 with the U.S. Securities and Exchange Commission. “You can assume that we are neither oblivious nor idle.”

 

Hawkins, 62, said in the shareholder report that Level 3 has “irreplaceable fiber assets” and that demand for bandwidth is growing rapidly with the “increasing movement of data and video across multiple platforms.” He said the company’s pace of adding new direct customers has been “disappointing” and that it needs to translate demand into revenue growth.

 

Netflix Contract

 

Earlier this month, Level 3 won a contract to provide video-streaming and storage services to Netflix Inc., the mail- order and online movie-rental company. Level 3 shares rose 7 cents, or 7 percent, to $1.07 at 2 p.m. today in Nasdaq Stock Market trading.

 

Hawkins and Cates were named by Morningstar Inc. as the top U.S. equity-fund managers of 2006. Longleaf Partners returned a cumulative 66 percent in the decade ended Sept. 30, compared with the 4.2 percent decline for the benchmark Standard & Poor’s 500 Index, according to the fund’s marketing materials.

 

http://www.bloomberg.com/news/2010-11-22/level-3-s-top-holder-hawkins-signals-push-for-better-results.html

[brker_guy]

Definitely, Carl, definitely!  After I read Longleaf's Q3 letter, i got a sense that Longleaf won't take it lying down anymore.  They will do something.  I think we will see Mason and Cates play a more proactive role in pushing the management of LVLT to get the value of LVLT up.

 

The news that I read from NFLX' new pricing model for streaming today is VERY ENCOURAGING.  I think it's NFLX' ways of training its customers to access video content online, and that's a great way for LVLT to earn more on its invested capital if more and more people access streaming to watch movies rather the old traditional snail mail delivery.  Once the customers become acquainted and use NFLX like they do YouTube, can you imagine how much money we can make from LVLT?

 

With the ATP Championship taking place in London this week, if LVLT can capitalize on that event and similar major tournaments like that one and corner the CDN market on that, we will grow in Europe with our CDN assets as well. 

 

http://www.tennistv.com/page/WatchLive?WT.mc_id=atp2

http://www.barclaysatpworldtourfinals.com/Multimedia/Video-Landing.aspx

 

 

 

 

[Guest ValueCarl]

Lions and tigers and cyber attacks!

 

Between North Korea and Chinese news scares populating the global markets these days, the US authorities assuming they're not going to continue being part of the problem, know damn well how to protect the internet from harm. All they need to do is buy one dedicated pipe and corresponding state of the art fiber, from "the network partner you can rely on."

 

<“The Internet becomes the tactical nuke of the digital age,” Kass told CNBC. “I believe cybercrime is going to explode exponentially next year as the web is invaded by hackers.”

 

”I think we see a specific attack on the NYSE,” he told CNBC. “The aftermath will have a profound impact and cause a weeklong hiatus in trading as well as a slowdown in travel,” he said.

 

Kass also believes the market has topped and that political gridlock in Washington will deter fiscal solutions from happening.>

 

http://www.moneynews.com/StreetTalk/Doug-Kass-Cyberattack-Shut/2010/11/23/id/377907?s=al&promo_code=B2B1-1

 

Brker_guy, I researched this "delisting" risk directly with Nasdaq this morning, something that scoundrels keep yakking about X more nefarious venues, and come with this answer.

 

LVLT has their "consolidated bid price" listed on their website, for Friday, November 19th's close, day nine of the full ten business day requirement to close above a bid of "one price per share" including yesterday, as the $1.00 price. Assuming this is correct, they should be receiving a notice from Nasdaq stating they have now corrected the deficiency and are no longer at risk. There is a back door system into Nasdaq for companies involved with this matter, so they should know the factual answer by now.

 

That being said, they should release a PR telling their owners if Nasdaq is in agreement with them, or we're needing to count ten biz days above one price per share, which would have started again yesterday assuming Nasdaq is in disagreement. I think SHORTS are itching to know, and the knowledge of this being behind us again, at least short term, would be more painful for them versus us. imo

 

       

[Guest ValueCarl]

As a kid, I used to love "connect-the-dots" games. Some things never change even as I get old. 

 

 

Remember this?

 

John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation. 

Well, now we get this:

 

Janus and Wellington were previously identified in media reports as having received an email from a Portland, Oregon, firm that provides specialized research to investors.

 

In the email, the firm described an approach by the FBI seeking its cooperation in a broad investigation, the Wall Street Journal reported.

 

On Tuesday, Bloomberg News reported that closely held Wellington, headquartered in Boston, had received a request for documents from federal officials looking into insider trading. The report cited an unidentified source. A Wellington spokeswoman declined to comment.

 

Separately, Janus said in a securities filing that it "has received an inquiry regarding the recently disclosed insider trading investigation on Wall Street calling for general information and intends to cooperate fully with that inquiry. Janus does not intend to provide any further updates concerning this matter unless and until required by applicable law."

 

http://finance.yahoo.com/news/Fund-firms-asked-for-rb-2963673067.html;_ylt=AjoP44X3sJJhzL47STZg5XK7YWsA;_ylu=X3oDMTE1djVqa29lBHBvcwMzBHNlYwN0b3BTdG9yaWVzBHNsawNzYWNjYXBpdGFsamE-?x=0&sec=topStories&pos=main&asset=&ccode=

 

So then I wanted to see what Janus did with their (3) shares in the quarter. On a different note, I have some bad things to say about Fidelity, that US traitor, but I'll refrain until later! imo

 

 

 

LVLT

Level 3 Communications, Inc. NASDAQ-GS

Institutional Holdings Description | Show Summary

Click on the column header links to resort ascending () or descending ().

 

Owner Name

Select a name below for more information. Date Shares Held  Change

(Shares) % Change

(Shares) Value

($1000)

CAXTON ASSOCIATES LP 9/30/2010 229,864 0 0.00% $244

 

LPL FINANCIAL CORP 9/30/2010 218,808 20,365 10.26% $232

 

WORLD ASSET MANAGEME... 9/30/2010 214,352 0 0.00% $227

 

JANUS CAPITAL MANAGE... 9/30/2010 204,800 (1,388,400) (87.15%) $217

 

LAIRD NORTON TYEE TR... 9/30/2010 202,299 0 0.00% $214

 

AMIDA CAPITAL MANAGE... 9/30/2010 200,000 200,000 New $212

 

COMERICA BANK 9/30/2010 197,486 7,178 3.77% $209

 

DNB NOR ASSET MANAGE... 9/30/2010 197,052 0 0.00% $209

 

QS INVESTORS, LLC 9/30/2010 188,200 - - $199

 

JANNEY MONTGOMERY SC... 9/30/2010 180,750 62,965 53.46% $192

 

DISCIPLINED GROWTH I... 9/30/2010 179,300 (1,975) (1.09%) $190

 

HARTFORD INVESTMENT ... 9/30/2010 176,345 144,900 460.80% $187

 

ALLSTATE INSURANCE C... 9/30/2010 166,940 (31,026) (15.67%) $177

 

PARAMETRIC PORTFOLIO... 9/30/2010 160,092 (5,229) (3.16%) $170

 

THOMAS WHITE INTERNA... 9/30/2010 148,225 0 0.00% $157

 

SUSQUEHANNA INTERNAT... 9/30/2010 148,196 121,120 447.33% $157

 

DAVENPORT & CO LLC 9/30/2010 134,250 20,000 17.51% $142

 

APG INVESTMENT SERVI... 9/30/2010 130,165 130,165 New $138

 

ROYAL BANK OF CANADA... 9/30/2010 125,106 34,007 37.33% $133

 

AMERICA FIRST INVEST... 9/30/2010 120,907 3,000 2.54% $128

 

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

 

[brker_guy]

Carl, you are quite a detective!!!!  I am really impressed.  I saw the WSJ article on that "Dr. Skowron" of Frontpoint on my ride home, and thought of this Buffett quote,

 

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.

 

Then, I read in the NYTimes about Wellington.  I had to do a double take.  Wellington?  For goodness sake!!!!!  This is the firm made famous by John Neff?  Can't be!  What has the world gone to? 

 

I have been thinking about your comments on the "10-days" NASDAQ rule and our little position in LVLT.  You know that famous sight where MSFT has been worrying about?  I think it's been overrun by some boiler room operators.  There are a few scoundrels on there(You know which one I am talking about) who are on there 24/7.  On the 9th day of LVLT's making the consecutive day of closing above $1, those scoundrels mount a campaign late into the nights and early morning hours of bad PR against (3).  This morning, I noticed that they put on another assault.

 

So, I do hope sincerely when it is all said and done with this insider trading scandal sweeping the nation that, we will learn that these scoundrels and crooks at these famous fund shops are more involved than just drugs information.  I hope they nail them for secretively manipulating (3) because I think our stock is being manipulated BIG TIME!!!!

[Guest ValueCarl]

Brker_guy, I've known it for waytoolong now, i.e., foul play, outright criminal manipulation and fraud! Those boiler room MOFO have gotten strangely close to me right in my own backyard for a # of years now. It's been quite uncanny in a most eerie way, I must tell you.

 

Oddly, over the past "week," or so, this operator has stopped communicating with me either directly in the flesh, indirectly by his incessant emails "bashing" (3),  or via "chat windows" where he was haunting me by sending "software codes" which was strange as hell, during receipt and retrospectively! Maybe that's how they get locks on IP address to peer into different worlds, I don't know. There are too many coincidences tied to the information he knew about me, for it to not be real besides illegal. This is a very smart individual who attempts to appear harmless, of this much I am sure! Apparently, he worked in the defense industry too.      

 

For a long time now, they have destroyed "supply/demand" economics in the public marketplace, something that seems to continue costing (3) owners including myself, a fortune. It's nothing less than irreparable damages for legal minds to reckon with when pondering what they've done!  

 

There are some very deep pockets being investigated during this probe, so maybe, once all the facts are in, (3) can seek restitution on behalf of itself as well as its shareholders not unlike Mr. Watsa is doing in the case of "Stevie Cohen," one of the criminal operators hopefully being brought to "JUSTICE" as I write!  >:(

 

One of my trusted advisors tells me that, the broadband research company in Oregon, has closed its doors, by the way.

 

Don't forget to pick up on Sunit's "plus $19B" on top of $25B comment I thought I heard him say via the INTERNET PIPE at the public library where I listened in.  ;)    

[brker_guy]

Carl, I know for a fact that there are some really slimy characters on that chat who have tried to trace down my IP address when I used to post there a lot last year and bashed the hell out of them.  So, I am very certain that they have that capability.  Where I work and even at home, my network security is extremely tight and is always on locked-down.  So, no matter what they try, they would not be able to penetrate our firewall.  But I know they are trying very hard to get to people.....  I don't know how savvy or good you with technologies, but I refuse to exhange embedded files with anyone outside my circle of family and friends.  If I am at work,  I always scan the attached files before I download. 

 

I find it very odd that there are criminals out there who would go all out and spare no resources to take down (3).  They would have "MOFO" (Don't know if Sanjeev us for saying this word here) posting there 24/7 and holidays.  Envy is a very bad character to have....  I am very certain that when the dust settles, someone is going to pay for being a manipulator of (3).  Our days of revenge are coming...

 

One day, these guys will get their what's coming to them.  A long time ago, I used to be a shareholder of Janus.  When Tom Marsico left, I bailed.  I was one of the wisest things I did for my investment career. I took the money and bought BRK. 

 

Let me have a listen of it again tonight on the CC of Sunit's.  Thanks for the reminder.  I had to build a Lego set for my little boy last night... 

[Guest ValueCarl]

I'm sorry, Brker_guy, we need to define MOFO more clearly for our board's host.

 

Our term is reserved exclusively for men, with respect given to women unless they've somehow been captured by the cabal too.

 

In that case, they'd be WOFO as explained below.  ;D 

 

MOFO=Men Of Foul Odor

 

 

[Guest ValueCarl]

Although Thanksgiving Day is a less patriotic, less symbolic holiday than Fourth Of July for celebrating America's pride to be independent, especially their general ability to lead the globe in wise business/economic decisions at least up until two decades ago, it is my greatest hope that before Christmas this year, every American mutual fund, hedge fund manager, etc. has sufficient (3) shares in their stocking in order to prosper moving ahead! On the other hand, I'll have to talk to those Fidelity scoundrels pumping up China's Baidu versus taking "stock" in (3), comparatively speaking. Nice paper on The China Conundrum, Brker_guy!

 

I believe in America's success, only if (3)'s network continues enabling freedom seeking people X the globe to be liberated by their, and through their PIPES! One "cost efficient network" for ALL in order to innovate, collaborate, educate, entertain and express themselves openly, and without fear of criticism according to reasonable terms.

 

For without the (3) network, there is NO INTERNET at least for "the critical mass!" If there is no internet, mind us, there is no GOOGLE, so forget about Akamai's fast freight model currently being displaced by the "transport" owners.

 

As for "Fil Zucchi," whoever the hell he is, I think (3) owners should leave a lot of BLACK COAL from our subsidiary ops in his STOCKING instead!  ;D

 

In addition, let him eat "CROWE" from this day forward for not doing better homework on behalf of the other peoples' money he might have being entrusted with him.

 

My personal bias, like his, apparently, is only going to be rewarded by the "time" it takes to proven correct because, on Wall Street as well as Main Street, an "OPINION" is like an butt hole and each of us has one!

 

 

All important, best of breed, best design "internet protocol roads lead to (3)!"

 

Happy Turkey Day with great Thanksgiving to all of us Turkeys!!!!!!!!!!! :D

 

<On a day when Akamai (AKAM) is flying, up almost $2 as I write, a couple of words about the saga of the last few weeks. In my humble opinion, worrying about competition from Level 3 Communications (LVLT) or Limelight Networks (LLNW) is complete nonsense. What these companies might be able to take from Akami is the lowest of low margin business. If I had to worry about the loss of one customer for the type of service that Level 3 will offer to Netflix (NFLX) I would not be involved in this thing. I've said this before and I'm going to say it again: Akamai has long stopped being a dumb reseller of bandwidth. It is a software company; much like BMC Software (BMC) lets operators control their networks, Akami allows content owners to distribute their information over the networks in a fail-safe manner. That is very different from what Level 3 does, which is simply to provide a slightly more efficient network of pipes on which the content actually travels.>

 

http://www.minyanville.com/businessmarkets/articles/tech-sector-german-bonds-bandwidth-sellers/11/24/2010/id/31335

 

http://www.minyanville.com/gazette/bios.htm?bio=50