LVLT - Level 3

[FFHWatcher]

Perhaps what the others are trying to say is,

'If you can't make money after 5, 10, 15 years, how many more years will shareholders wait (I guess the share price answered that)?', or

'How many great companies take 5, 10 or 15 years to turn a profit?'  or,

'If the only way you can increase your revenue is to issue shares and debt to buy another company's revenue, how great is that company?'

 

                  Price shares mkt value  sales debt

Dec 2006   5.60 1.5B        8.4         3.4B  7.4B

Nov 2011   1.46 3.1B  4.6         6.2B        8.5B

 

Last 5 year broadband internet growth?  A lot?

[brker_guy]

FFHWatcher, how company do you know currently have 175,000 route miles of fiber?  If you do know of one, please do share.  The debt and the shares were not issued to buy up dead beat assets, they are being used to buy assets that will last a generation.  Verizon, which has its own long-haul network via MCI/Worldcom, has to rely on LVLT to carry its LTE/4G data traffic.  Besides those 175,000 route miles, LVLT's other competitive advantage are in its CDN portfolio, data centers, and long haul spectrum for wireless.  So many bashers and naysayers are focusing on the shares count, the debt and the profitability.  No one is looking at the ASSET side of the balance sheet...  It's just mind-boggling to me!

 

Let's not forget that Berkshire is a collection of companies that Warren put together as well.

 

If you want a network that last a generation, you can't expect results overnight.  Ask yourself, "how long did it take to build the Great Wall of China?"  The LVLT network is MUCH MUCH BIGGER than the Great Wall of China.  Thus, the economic yield should have great impact in the long run. 

[DCG]

The issue is that you guys are equating $ spent to build the network with 'value'. My view is that value is what they can get from those assets in terms of earnings, cash flow or reselling those assets. At some point those assets have to generate actual $ for them to be worth the 'value' you guys are claiming.

[brker_guy]

"At some point those assets have to generate actual $ for them to be worth the 'value' you guys are claiming." 

 

DCG, since you were the one that said this, "It is alarming that over the last several years, when the demand for streaming content has already greatly increased, LVLT losses have continued to increase rather dramatically."

 

Let me ask you emphatically.  Do you know how much does it cost to deliver streaming content to you?  How much do you think 1 hour or 2 hours of streaming video cost a content owner today?  There are 3 types of traffic that sits on a carrier's network like those of LVLT: voice, data and video.  Voice is pretty much a loss leader product.  That leaves data and video.  So, you claim that streaming has already greatly increased.  So, how much do you think a stream of IP video coming to your iPad, iPhone or PC cost on delivery?  I give you a hint.  The only way for you to make money off of streaming video is "bundled services", i.e. content aggregation and network delivery combined. 

 

From a consumer's perspective, you would think it's great to see the proliferation of video streaming and easy to be made, but if you are on the other side of of the fence, the "Ecosystem" is much harder than you think.  The consumer video business is one of the hardest business to make money on.  Ask yourself why the Japanese and Korean TV manufacturers keep pushing out new LCD/Plasma TVs each and every year, but prices on those TV sets keep dropping and dropping on a yearly basis.  The only way to do is via economy of scale.  So, for LVLT to make money from video streaming, you need a network that has reach and that can scale.

 

Let me repeat again:  So, for LVLT to make money from video streaming, you need a network that has reach and that can scale.

 

It will be much easier for LVLT help a vendor like NFLX to reach its audience in Latin America and in the UK because of its network reach.  Otherwise, NFLX would have to go and sign CDN deals with Latin America telcos or telcos in the UK... 

 

So, yes, "At some point those assets have to generate actual $ for them to be worth the 'value' you guys are claiming."  Digital video is that one vehicle that you are referring to that will generate actual $ for LVLT, but it isn't overnight like you think it is.  If streaming video is such a bonanza like you think it is, Google wouldn't still be relying on selling ads in order to keep YouTube running...

 

As for the other type of traffic, Data, that can be a bonanza for LVLT, you don't have to listen to Crowe's pitch on the Cisco Visual Index.  Just look at this:

 

http://www.ericsson.com/news/1561267

 

By 2016 more than 30 percent of the world’s population will live in metropolitan and urban areas with a density of more than 1,000 people per square kilometer. These areas represent less than 1 percent of the Earth’s total land area, yet they are set to generate around 60 percent of total mobile traffic.

 

Ericsson expects traffic generated by advanced smartphones to increase 12-fold to roughly equal mobile PC-generated traffic by 2016. People are watching videos on their mobile devices much more often. Tablets are prime for watching video on the go, and smartphone screens have only increased in quality

 

So, if you don't build a network that can scale and has reach which will last a generation, how do you think you are going to capture those traffic demand?

[FFHWatcher]

"you forgot to mention that share count has gone up ten times over that period. and that pretty much tells you why the price is about $1.40 right now."

 

In your two hands, count how many competitors does LVLT have left from the old telecom boom.  Then, you should ask yourself of those shares count were justified.  Count them.  Start with Qwest.....

 

increasing the share count 10 times in 12 years has kept them out of bk and done little else for shareholders.

 

The best (measurable) value that LVLT has created in the past decade is that of a realized capital loss or if you are the CEO, $33M of Compensation in the past 5 years alone ($23M of stock and $10M of cash and the stock is worth a lot less but cash is cash).  Imagine getting that kinda dough for taking the share price from $5. to $1.40 in the past 5 years?  Actually, his comp is very ordinary and has declined (good for the board) in the past few years. 

[DCG]

brker_guy, I get all that, but when will traffic demand be enough so LVLT can draw cash from the vast network they've built? It seems like LVLT has been saying for the future for a relatively long time now. There's only so much cash you can burn through before you need to generate some real positive (and extended) cash flow.

 

I have no doubt that their network is important. What I don't get is that it seems like every time they announce a new large deal (such as the one with Netflix), they also have to spend even more $ to expand their network, after already spending a ton of $ to build it. To put it simply, when will the network be complete to the point where they are bringing in more cash than they are spending?

 

 

 

[brker_guy]

"Actually, his comp is very ordinary and has declined (good for the board) in the past few years." 

 

FFHWatcher, I am glad to know that you have seen that management of LVLT isn't looting the place.

 

"brker_guy, I get all that, but when will traffic demand be enough so LVLT can draw cash from the vast network they've built? It seems like LVLT has been saying for the future for a relatively long time now."

 

If we all know the answer to this question of yours, there wouldn't be 133 pages of postings and debating about LVLT's value or the economic of LVLT for the long haul.  When will traffic demand will come to completely fill up the fiber pipes, that's a $64K question...

[Guest ValueCarl]

Why do the Ghosts of Mohnish Pabrai keep coming here to haunt our board? Just when I thought I was out of it, they sucked me back in again!

 

"WHEN!," WHEN!, WHEN!, they ask! And, "HOW!", HOW!, HOW will they ever justify such huge capital expenditures standing at $37.5B in conservative accounting RCV?

 

Would you pay us handsomely if we provided you the right answer at the right time? Why do we even waste our time on men who don't believe in this enterprise? You must be able to fathom bringing your eyes as well as your ears anywhere across the globe to value this business model. 

 

Let's start with a tid bit, or a morsel of food garnered from casual conversation with company personnel. Recently, it has been implied that, "I" as in "me" might not be "happy" as to the speed surrounding "when," but when will happen almost with certainty relative to confidence factors I have gleaned.

 

In the meantime, one large government contract, or one customer exclusive win, like APPLE TV, could catapult this stock so that it never looks back or has bogie men representing phantoms across various venues asking WHEN or HOW again!

 

Now, for all you psycho babble misfits seeking to find gold in thar hills before your time, I will leave you with this when thinking about when, and tell you as I tell those who are close to me, whenever they get too antsy or potty mouthed over the wait time: Buy more DIRT CHEAP SHARES($1.40-$1.45 pps) or just STHU!  >:(

 

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

 

 

In a business book by James C. Collins called Good to Great, Collins writes about a conversation he had with Stockdale regarding his coping strategy during his period in the Vietnamese POW camp.[9]

"I never lost faith in the end of the story, I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade."[10]

When Collins asked who didn't make it out of Vietnam, Stockdale replied:

"Oh, that's easy, the optimists. Oh, they were the ones who said, 'We're going to be out by Christmas.' And Christmas would come, and Christmas would go. Then they'd say, 'We're going to be out by Easter.' And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart."[10]

Stockdale then added:

"This is a very important lesson. You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be."[10]

Witnessing this philosophy of duality, Collins went on to describe it as the Stockdale Paradox.

[edit]       

[bmichaud]

Why do the Ghosts of Mohnish Pabrai keep coming here to haunt our board? Just when I thought I was out of it, they sucked me back in again!

 

"WHEN!," WHEN!, WHEN!, they ask! And, "HOW!", HOW!, HOW will they ever justify such huge capital expenditures standing at $37.5B in conservative accounting RCV?

 

Would you pay us handsomely if we provided you the right answer at the right time? Why do we even waste our time on men who don't believe in this enterprise? You must be able to fathom bringing your eyes as well as your ears anywhere across the globe to value this business model. 

 

Let's start with a tid bit, or a morsel of food garnered from casual conversation with company personnel. Recently, it has been implied that, "I" as in "me" might not be "happy" as to the speed surrounding "when," but when will happen almost with certainty relative to confidence factors I have gleaned.

 

In the meantime, one large government contract, or one customer exclusive win, like APPLE TV, could catapult this stock so that it never looks back or has bogie men representing phantoms across various venues asking WHEN or HOW again!

 

Now, for all you psycho babble misfits seeking to find gold in thar hills before your time, I will leave you with this when thinking about when, and tell you as I tell those who are close to me, whenever they get too antsy or potty mouthed over the wait time: Buy more DIRT CHEAP SHARES($1.40-$1.45 pps) or just STHU!  >:(

 

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

 

 

In a business book by James C. Collins called Good to Great, Collins writes about a conversation he had with Stockdale regarding his coping strategy during his period in the Vietnamese POW camp.[9]

"I never lost faith in the end of the story, I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade."[10]

When Collins asked who didn't make it out of Vietnam, Stockdale replied:

"Oh, that's easy, the optimists. Oh, they were the ones who said, 'We're going to be out by Christmas.' And Christmas would come, and Christmas would go. Then they'd say, 'We're going to be out by Easter.' And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart."[10]

Stockdale then added:

"This is a very important lesson. You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be."[10]

Witnessing this philosophy of duality, Collins went on to describe it as the Stockdale Paradox.

[edit]     

 

 

I'm being serious when I say the Jim Collins quote is quite inspiring. I am a big fan of his. However, it got me thinking - is this matter of "when" perhaps what was discussed between the Wright Brothers at Kitty Hawk? i.e. It's only a matter of time before the entire population is flying as oppose to merely driving? Similar to with LVLT, is it only a matter of time before the entire population is streaming everything they want their eyeballs to see over their phones?

[DCG]

                      To four stoogies from the (3) Stoogies

 

 

1. Cardboard

 

2. DCG

 

3. peter_burke_ceo

 

4. FFHWatcher

 

How to slap some sense into 4  knuckle heads:

 

 

Ben Graham, I want I point out that neither me, nor the other 3 people you directed your post to, have not taken any direct shots at you guys individually, and yet you respond by calling us Stoogies and Knuckle heads? And ValueCarl is calling us 'psycho babble misfits'?

 

Obviously by the share price, the rest of the market currently seems to agree with our points about this company. I also have the view that IF this company starts to generate huge sums of cash, there will plenty of time to invest in it without needing to try to find the bottom in the stock price.

 

I am honestly trying to better understand this company and feel like I am asking perfectly valid questions in this thread, in which you guys usually respond with random links, quotes and hyperbole (haven't used that word in a while).

[alertmeipp]

question yourself when you are way more bullish than the management..

[Cardboard]

It is interesting that I come out and share some dissatisfaction about Jim Crowe's lack of sense of urgency and that some are coming out to insult.

 

Please get your head out of the sand or from another place that I don't need to write about.

 

All I said is that this company has had enough "vision" and now need to execute. These 100,000 buildings that have been touted to us as some kind of low hanging fruits, I simply asked what is taking so long to convince them to come on board? These are not simple consumers, but companies that look at every way possible to improve results and costs. People being rewarded to go find the best solution.

 

People that hide behind sentences like "over the long term" have found the perfect excuse to continually underperform since there is no benchmark or timeline whatsoever in this sentence. It can always be reported to tomorrow. I do believe that people in life need to have both short term and long term objectives and that they should go both in hand.

 

While I am an investor in Level 3, I do find the progress in sales to be subpar. While I will not push them to do better than the trend, I will still ask question as to why adoption for their offering that is apparently unbeatable for demand that is already in place has been so slow by businesses? I think that some of you should also ask yourself this question. Upon reflection, you should come out to a similar conclusion that management is not doing enough via sales effort, promotion or other to attract these customers. It does not destroy the thesis or the value of the network, just that some very well paid people need to be more productive.

 

Cardboard

[Guest ValueCarl]

DCG, I concur with Ben Graham! You have not been paying close attention in looking for the back handed slaps that "a couple" of posters here, which is more than TWO I will have you know, have had to endure on this board, including other threads like "Netflix," recently, and personally, because you're not keeping proper score in your book, or FFHWatcher telling us to go over to YAHOO! But let's not denigrate this conversation to child play or baby talk about he said, or she said, nah, na nah, na nah na!  :'(

 

Rather than fight and argue with a no can believe crowd, I have chosen to back away here, and morph into your doom and gloom bearish cases inside of other venues while I advise smarter money pools who I care about, to buy with VENGEANCE!

 

As for psycho babble, we are all guilty from time to time, and I am not excluded, but the piece I provided should have been appreciated for those who may consider themselves long sufferers.  It was offered in friendship to make you "THINK." JUST THINK, DCG, and envision the future the "VISUAL NETWORK" is creating right before your very eyes and underneath your nose to smell at "DIRT CHEAP PRICES" that are ridiculous, quite frankly. 

 

Cardboard, they will not BUILD the connections assuming they will come, until the inhabitants inside of those venues at those 100K buildings just 500' away from (3)'s fiber factory are "insuring" with financial commitments those services will be bought. You can bet the metamorphosis which Ben Graham has pointed out tied to "upstream traffic" exceeding "downstream" as part of this next "SHIFT" will have them craving for (3) to BUILD IT because they CAME! 

 

Bmichaud, the AIRLINE INDUSTRY and Howard Hughes,' " It's the wave of the future," commercial aircraft business, can only DREAM of the KINDS OF MARGINS embedded inside the LVLT FACTORY! Dream suckers, dream! 

 

You PIKERS-that's a SLAM!-want guarantees at very high rates of return on your capital, including retrospectively during the past eight or nine years of buying minimally, go to THE BANK and try your LUCK THERE! Try Bank of America(BAC) first, they need FRESH DEPOSITS badly!!!!!!!!!!!!!!!!!!  >:(       

[FFHWatcher]

How can anybody possibly take you two seriously? 

 

ValueCarl seems to know a lot about telecom and LVLT yet neither of you post in an intelligent constructive useful manner.  What gives?  I know I could avoid reading your posts but it's like going by an accident scene, you just have to look.  Here is a short partial list of annoyances that I have compiled;

 

- you include links that have nothing to do with LVLT, telecom, etc. and waste peoples time constantly

- you post ridiculous lines that are absolutely terrible attempts at wit and I don't know what you are attempting to do with  them, such as; "This being said, get Big Jim on the phone! I want my "delicious" APPLE to be served to me on my BREAKFAST TABLE tomorrow morning!!!!!!!!!!" or "Cluster bombs are bursting -  The T(r?)end is Level (3)'s Friend" or "As for Howie being excited about "DRONES" that will now keep him from hopping onto his tractor early in the morning? Well, if Howie isn't happy, then his father will be, because now Howie has more time for Angelina Joline!  ;D "  Useless drivel in my opinion.

- you constantly reference Charlie Munger and Warren Buffett in some sort of attempt to legitimize that Level 3 is a great value.  It may be a great value but using Buffett and Munger's names in almost every message does not make it so even if Buffett is from the same town as the Chairman of LVLT

- you each post a few times per day

- you avoid discussing that Level 3 keeps acquiring companies yet their revenue never goes up. You rarely, if ever, discuss the numbers, the losses, the debt, the HUGE growth of the internet yet no growth at LVLT in the past 5 years...you know, the important stuff when determining if a company is a good value.  The best I have seen lately is the pointing to someone else's analysis of the numbers (who, by the way clearly states that Level 3 is absolutely NOT a Ben Graham type investment, so why a poster named 'Ben Graham' names LVLT as his largest or only holding is perplexing to me...).

- you each use bold, CAPS LOCK, different colors, etc., for god knows what reason

- you constantly compliment each other stating how bright each one of you are, yet know one else is?

- 'Ben Graham' includes a link at the bottom of each one of his posts to bengrahaminvesting.ca at the University of Western Ontario.  What does that have to do with you?

 

- like I said, the list is partial.  There are many more.

 

 

Anybody who takes ValueCarl and Ben Graham seriously, please do a simple reply to this post and type +1 or +2 and so on, maybe even include a couple of useless links to youtube videos that are about something unrelated to telecom, LVLT or anything for that matter.  If you get to +5, I will appreciate that at least a few people are benefiting from your posts and leave this thread alone.  Otherwise, there is lots of room at the Yahoo Message Board.

 

I wrote the above post a few weeks ago.  I am still waiting for the first "+1" for you two.  If anything, there seems to be a growing list of -1, -2, -3....

 

I assume your purpose is to open up this board's eyes to the LVLT investment and you are having the exact opposite effect as can be seen in the past few dozen posts from others.  Like I said initially, no one can you two seriously if you continue to post the way you do <please see above partial list of annoyances>.  The Yahoo Board guys love that crap  :o

[Cardboard]

"Cardboard, they will not BUILD the connections assuming they will come, until the inhabitants inside of those venues at those 100K buildings just 500' away from (3) fiber factory are "insuring" with financial commitments those services will be bought. You can bet the metamorphosis which Ben Graham has pointed out tied to "upstream traffic" exceeding "downstream" as part of this next "SHIFT" will have them craving for (3) to BUILD IT because they CAME!"

 

Maybe that I am slow a little, but again if the offering is that good, why don't these people go for the remaining 500 ft? What is the cost of that tiny pipe and connection really? Some of these businesses must have CURRENT needs for that kind of speed and capacity at lower costs. No?

 

At least, what they should give to investors is more info. How many of these 100,000 buildings did you sign last quarter?

 

Basically my message is simple. I am fed up of Jim Crowe's talk of vision and grandeur. I want a manager in there that focuses on things he can control and go after them agressively. Not create sales at any cost, but go after the ones that make sense and report to us the owners what these are. After all, maybe that he is doing just that. What is for sure, is that he is terrible at communicating properly what has been done recently and what are the goals for the next say 6 months. I think that everyone gets the 5 or 20 year plan. I would like to see more focus on what are all the small things that they can do now to get to that ultimate goal.

 

How are managers rewarded in there? What are the sales and margin targets?

 

Cardboard

[Guest ValueCarl]

I have heard numbers from $600MM- $1B in order to finish the "connections" to those enterprise buildings.

 

Cardboard, just give me one GENERAL in the U.S. military complex who is a stand up guy and gets it while refusing to adhere to the status quo, to have signed with Jim Crowe since his return trip last week, and I will be content in the short term! Americans must jettison the status quo in favor of the shift towards fast speed, cost effective, state of the art internet services developed for The Information Age, both inside and outside of our military complex which requires "SECURE NETWORKS" buttoned up "tight as a tick!"       

 

"Bring it on!" is Jim Crowe's favorite cry as being the son of a decorated Marine from Normandy, if I recall correctly, and I think I do!  ;D

 

James Crowe

 

I'm going to take the first question, and if you would take the second, Jeff. With respect to our business with the government, our federal sales -- coincidentally, I'm getting on an airplane right after this call to go visit several agencies that we do business with and hope to do business with. We have had record sales in our federal channel. And by record sales, I mean sales that are 2x, 3x what we've had at this time last year. We see big opportunities. And oddly, it comes, or oddly understandably maybe, it comes because governments, local, state, federal, are all under budget pressure. When they're not, they tend to continue to do next year what they did last year. Under budget pressure, every program is reviewed, every opportunity to get a better value proposition is being explored and that's a great opening for us. So we see substantial opportunities across not just our federal channel but with the state governments, with educational institutions, and it's showing up in sales.

 

James Crowe

 

So I commented earlier about the federal channel, and I just reiterate that we have small share of a market that is really focused on value proposition and we now have the kind of scope and scale that governments need. We have a big federal channel. And government is a -- both state and federal have long sales cycles. They have an hearsay [ph] you have to propose in the programs, get qualified and then have individual contracts. That's behind us and I think we look forward to a great and increasing outcome for our federal channel. With respect to large enterprise, Jeff, do you want to comment?

[Kraven]

I KNOW that LVLT is a super duper company and all and can stream AnYtHiNg, but I'm hungry.  Can it stream me a sandwich and a soda now?

[brker_guy]

FFHWatcher, DCG, Cardboard, Peter_Burke_CEO, ValueCarl, and Ben Graham,

 

Let me be the one to offer peace amongst you guys here.  Let's all stay calm and trade logical debate here and not turning this into another Yahoo! Message board.  A few months ago, I said that I would not continuously posting on this subject and let LVLT management does its execution, and I have done just that, until recently.  I have been in and out of this position since the tech bubble days, and I can truly say that I haven't seen a more hated company than this company.  However, for every non-believer and naysayer, there is someone who is a believer in the company.  I happen to be one of those believers.  So, why have I decided to speak up now, you ask?  Here are my reasons:

 

1)  People just have WAY TOO MUCH unrealistic expectations from this company to return to its glory of the Tech Bubble Days as fast as it has fallen.  The ink is barely dry on the GLBC/LVLT merger, but the bashers are already out taking pot shots at the company.  Other than ValueCarl, Ben Graham and I, did any of you guys look at LVLT's Q3 and look at the quality of those numbers?  There are many pieces to this puzzle that management had to get done before the end of Q3, and they were able to close the GLBC purchase AHEAD of schedule while executing and reporting on their own operations.  Other than voice and wholesale, every segment of their business was growing.  It was a SOLID QUARTER, but the bashers and Wall St. operators have managed to make a bear case against LVLT's numbers.  If you look at the questions coming from analysts during the CC, they all wanted to know the cost of GLBC integration and the schedule.  NO ONE on there care to know what LVLT will be like in a year with its business model execution.  They only care about those idiotic spread sheets they are running. Damn shame!  I heard no one on the CC last week questioning what LVLT will do with wonderful asset like GC IMPSAT to grow in Latin America. 

 

http://www.globalcrossing.com/LATAM/sp/company/company_global_caring_latam.aspx

 

Back in 2006/2007, when LVLT bought Telcove from Adephia, they got a boat load of 39GHz Wireless Backhaul spectrum for 4G.  How many of you guys thought that was going to pay handsomely now because VZ has to come to LVLT looking for wireless backhaul capacity to carry its LTE traffic?  If you are asking when will traffic will pick up, look no further than the usage of 4G devices.  It was a dormant asset that LVLT got for nearly pitance and finally paid off.  Here is another example.  When LVLT bought WilTel, it got a little company called Vyvyx with it.  Today, Vyvyx is at every sporting venue and is the key enabler for you to get those wonderful no latency HDTV to your house every Saturday and Sunday for football games, baseball games or basketball games.  So, with the closing of GLBC, LVLT will get to combine and expand Vyvyx asset with Genesis Solutions into Europe and Latin America.

 

https://wireless2.fcc.gov/UlsEntry/attachments/attachmentViewRD.jsp;ATTACHMENTS=1ffbT54Fyq1Kypnby1yMnFk9bf12sJkN01cMzLZYh5T89NRRv2DS!-439510360!1652455232?applType=search&fileKey=536411813&attachmentKey=18311888&attachmentInd=applAttach

 

http://www.e2f-nsu.com/news/2006/Level3toacquireTelCove.pdf

 

http://www.lightreading.com/document.asp?doc_id=207282&f_src=lightreading_gnews

 

"As part of the transaction, Level 3 will be acquiring over 300 LMDS and 39 GHz licenses covering 90 percent of the population of the United States."

 

http://www.globalcrossing.com/genesis/genesis_landing.aspx#topofpage

 

All of these assets that sit on LVLT's book have gone virtually noticed by you guys and the bashers.  And I have YET to touch on the CDN business that LVLT got from Savvis for a $135Mi:

 

http://gigaom.com/2007/10/04/level-3-throws-a-wrench-in-the-cdn-business/

 

2)  When you guys are comparing LVLT, you should really dive into the wireline businesses of their peers to make a fair comparison.  One of the disadvantage of being a Tier-1 IP backbone is that they don't have the CA$H to have their own retail wireless operation like AT&T, Verizon, Sprint, T-Mobile etc...  However, you need to dive into AT&T, Verizon, Sprint, Century Link, XO, CCOI etc and extract out their wireline businesses and compare that against LVLT.  I am a shareholder of Sprint, and I always gag whenever I see Sprint's wireline business reporting earnings.  They would just be better off selling that division to LVLT to focus on their own niche, wireless...  It ought to be an APPLE to APPLE comparison! Both VZ and T's earnings are boosted by their wireless operation, and frankly speaking, if it wasn't for the iPhone, T would have seen bankruptcy a LONG TIME AGO!

 

3)  The last 500' connectivity and the 100,000 buildings connection arguement.  You guys need to remember something that when you are encroaching on the last miles guys' turfs, you would be dealing with the PUC.  It's this PUC barrier that LVLT has to overcome, and if you think that dealing with the FCC is a headache, wait til you deal with the PUC.  In each city, there are only 2-3 last miles dominating that city.  Do you think those last miles guys will let LVLT sneaking in and take their customers away so easily?  They will throw every road block they can to stop you from coming in.  So, how money do you have to lobby those PUC guys while trying to execute your own business?

 

4)  Finally, let me touch on this subject of technology evolution and adoption and how you should view the evolution of tech.  A good friend of mine who is a very respected money manager used to tell his shareholders, "I don't invest in technology because I used to work in the area of technology."  Technology is an evolutionary change; it's not revolutionary change like you think it is.  Here are a few examples for you.  GPS has been around since the late 1970s and early 80s.  It has not become ubiquitous until the last 5-7 years.  That's nearly 30 years of technological development and innovation to get to where we are.  And ask yourself, "What is that killer application that made GPS to the the ubiquitous technology as it is today?"  Can anyone of you tell me what that is?

 

IP networking technologies have been developed since the day that DARPA invented ARPANET, and it has been nearly 40 years.  Yet, there are still people out there relying on those dial up networking.  So, why isn't a "killer application" that puts IP Networking technology over the top?  Think about that.  Digital Video is that big hope for of a killer app to put IP networking over the top.  However that requires streaming technologies, and I have been around the field of digital video and streaming technologies protocol since 1996.  Yet, until the last 2-3 years have we seen the proliferation of streaming videos.  That's nearly 15 years of innovation. 

 

So, folks, what I am saying is that you should take Level (3) as an integrated package of a company.  You can not expect a company with "physical" asset of its size to turn overnight and be profibable.  You can't have profits if you can't have revenue, and you can't have EBTDA growth without revenue.  So, I hope you take a realistic perspectives on what you see with LVLT.

 

Let's understand one another and trade intelligent posts to this company.  If you are going to be a basher, lay out some real facts and look at them realistically!

 

 

[Guest ValueCarl]

Brker_guy asks, "What is that killer application that made GPS to the the ubiquitous technology as it is today?" Satellite radio  ;)

 

These gentlemen should be asking themselves as we get closer to the widespread adoption of the "when" in ALL IP VIDEO, how much the INCUMBENTS who must have (3)'s global backbone are going to be willing to pay for $37.5B and growing PP&E, which can't be replaced, then, not when?  ;D

[Guest ValueCarl]

I see and hear telecom things! Sometimes those things are psycho babble, while many times they are not!

 

At the peak of the Y2K bubble, it was suggested that AT&T made the all in purchase price offer at $130 pps before the long haul network's completion, or approx. $45B in market cap at the time, and was REBUKED!

 

If this is true, and I have no reason to believe that it was not based upon things which sneak into my ears, how stupid were those men from Omaha for saying no, or what was their ulterior motive for doing so understanding The Age of the Dinosaurs and Evolution of The Human Species?

 

Today's price would be $222 pps at a $46B market cap, or just $15 pre reverse split to attain that prior "market valuation," nearly twelve years later. 

 

Either it was calculated to be necessary for all this work to be completed at a loss since that time, or they have a huge amount retroactive cash flows to mint in order to get us to $1,980 per share, or the break even of that old AT&T rebuking($132 pps)!  ??? 

 

Of course, that would be a greater than a $400B market cap, using today's shares outstanding while exceeding Apple's own market cap today, but what's so hard to not believe when considering the CAPITAL INVESTMENTS that went inside this network by connecting all the world's EYEBALLS together as ONE? 

 

In summary, buy the stock, it's DIRT CHEAP and STHU while doing so! 

 

   

[DCG]

brker_guy: Now THAT is how you answer questions. Thank you.

 

 

[Cardboard]

I find it bizarre to get comments like: Shut The Hell Up. That is what you meant ValueCarl, right? When all I am asking for is for management to simply try to do things better.

 

Maybe that we can start we a baby step Mr. Crowe. Sell the coal operation. Can anyone here tell me please what we are still doing in this business? It is tiny and has nothing to do with broadband. They don't even talk about it in any presentation that I have ever seen or conference calls. Then if we could get some money for that business then please start and connect let's say 500 of these 100,000 businesses.

 

Start somewhere that is all I am asking for. Then set higher objectives for the organization that seems stuck in the past. The future is here. It needs to be captured now. They need to stop having that mentality of waiting for things to happen. 2% sequential sales growth is an unacceptable measure. It needs to be a stretch goal of whatever can be achieved now.

 

By the way, I have read the press release, 10Q, conference call presentation and listened to the conference call. My comments above have nothing to do with the Global Crossing acquisition, but all about Level 3 existing business. My conclusion is that not enough is being done. While margins are up, I see that sales are barely up and that is not good enough anymore. 

 

Things like network reliability, churn, customer complaints, new connections this quarter, number of terabytes carried this quarter or other are never being discussed. If this is not discussed in presentations to the public then how am I supposed to believe that it is something that matters within the organization? What are the measures that are important to the folks who are doing the day to day work?

 

Cardboard

[FFHWatcher]

Cardboard, you obviously have minimal experience in telecom and the potential EXPLOSIVE growth of IP HD VIDEO. Have you considered measuring the compounded growth rate of the volume of their press releases?  Very impressive!  When you put that into a NPV calculation, it is hard to arrive at a figure below $37B.  That, combined with the FACT that the margins embedded within the LVLT Factory (assuming you don't look at the financial statements and never, ever use the financial statements to back up your arguments) are the envy of most industries should be enough to get you to STHU.  ;)

 

I can only imagine how embarrassed :-[ you must now be, Cardboard.

 

LOL  ;D

 

(Cardboard, please do not take this post or any posts or ValueCarl or Ben Graham or anyone else who chooses to use cap locks, colours, bold, unrelated Youtube videos, emoticons, references to WEB to somehow legitimize LVLT, metaphors in almost every paragraph and above all else, refuse to use financial statements and figures such as net profit, sales growth, net margin, ROE, EPS, to back up their arguments).  Remember, all financial losses and lack of growth can be reversed via excessive press releases and message board posts.  LVLT releases more press releases/yr than Berkshire does every 10 years!!

[DCG]

;D

[brker_guy]

FFHWatcher,  I see that sarcasm is serving you well...  Very funny guy you are!  Like any technology companies, LVLT releases a fair amount of its press releases.  Hey, here is one for you?  Why don't you compare the press releases of LVLT against its peers (i.e. T, VZ, CTL, S, CCOI, and XO) and see who puts out the most to really measure your "compounded growth rate of PR"?

 

"When you put that into a NPV calculation, it is hard to arrive at a figure below $37B."  Like I said earlier about analysts and their Excel spread sheets, you should take notes of what I said.  Speaking of "assets" that you can't compute, FFHWatcher, I don't know how many times you have been to Omaha, but there was a time when Warren expressed his regrets of NOT being in business with Peter Kiewit & Sons over the years due to their pure size, but that's neither here nor there...

 

Cardboard brought up why they haven't sold their coal business.  That is a very good question, but I am sure it's a good cash flow engine for them that didn't require a lot of maintenance CAPEX to run.  So why get rid of a good thing?  If you guys go back and look during the time of the tech bubble, LVLT had to get rid of their Asian fiber leg and their tolls road in Southern CA to satisfy creditors and reduce their debt load.  If you ask management now, I am sure they will probably tell you that they have regrets selling that Asian fiber leg and their tolls road in Southern CA.  A few months ago, I ran into a guy who is tolls road expert in his industry at a technology trade show.  We started talking and somehow the subject turned into investing, and I brought up LVLT.

 

The guy went on to tell me everything he knows about PKS and the people who used to run MFS Communications (i.e. Crowe, Patel, etc).  He told me about the tolls road that LVLT had in Southern CA, and he said to me, "I am sure that they really didn't want to get rid of that tolls road because that is a cash cow machine.  That tolls road has the highest revenue in the nation during peak hours."  Then, he said this to me, "Those guys at Level (3) are exceptionally smart, and they think ahead of their time."  Oh, I forgot to say.  THat guy used to compete head-to-head with the PKS in building tolls road. 

 

So, guys, keep on barking your criticisms at how poorly managed LVLT is and how bad of a job they manage their fiber assets etc...  I gave you a few prime examples already: wireless backhaul spectrum, Vyvyx, and CDN, which are all yielding juicy returns on those assets.  Unfortunately, all you guys care about are using your Excel to compute your NPV.  Any of you ever ask Warren and Charlie if they use Excel to come up with a NPV?  Think about that...