LVLT in WSJ Today Fairfax Mentioned

[GOODYRL]

http://freepdfhosting.com/ad22991dac.pdf

[Guest ValueCarl]

http://www.jubileeprosperity.com/prosperity/level-3-communications-57-cents/

[Guest ValueCarl]

I haven't seen a BOD using his own money to buy shares in this enterprise for ions. Considering this director's military back ground, the size of his individual purchase, and the number of (3)'s spare conduits available for dedicated, exclusive military use, I am very, very optimistic in the short term.

 

Before anyone else gets overly optimistic with their "hard earned" capital; however, reconsider the link to Jubilee Prosperity that was posted earlier, where about eight months ago, its financial steward had considered this dastardly telecom name an investment for his future generational heirs.

 

In the meantime, there's an Admiral on the deck of the Enterprise (3) ready for saluting!  8)

 

http://lvlt.client.shareholder.com/secfiling.cfm?filingid=1225208-10-18951

[Cardboard]

I don't know ValueCarl.

 

I was very disappointed to see this Google "alliance" with Verizon. Unless I totally misunderstand, it seems more like control vs expansion of the Internet.

 

I was also very disappointed with Level 3 latest results. These guys show no growth. They keep bombarding us with announcements about this and that deal, but they appear immaterial. This company needs to generate at least $1 billion a quarter in revenues and they were not even capable during Q1 and Q2 which were good for most U.S. companies. You would think that demand for communication services would have followed somehow the U.S. economy. And this wireless tsunamy... Nothing has transpired into their results.

 

It seems like a good asset, but so far they have not generated the kind of revenues required to support their cost of capital. At a lower debt level it would make money for shareholders, but that is not how they are structured. A sale would make sense to me since I am starting to believe that Crowe won't get it done. Watsa and Hawkins have been very patient and I think it is time for them to ask some tough questions. Is it the management, barriers by other telcos, technological advances? Something does not jive here IMO. Patience is a virtue, but denial is what?

 

They were even entertaining the idea of "accretive" acquisition on the conference call! How do you do that with a debt structure like that?

 

Cardboard

[Guest ValueCarl]

I couldn't agree with you more, Cardboard. I'll join your choir any day. We just need to sell one empty PIPE to the government and/or the military to turn interest expense into operating revenues while putting the naysayers to rest once and for all.

 

As Big Jim says, "Bring it on!" even if the Admiral had to take this RUMBLE in the JUNGLE, out to the Mohave Desert where the heat will separate the men from the boys!  8)

 

I have always been told that, these people do not waste the expense for newswire services unless there is a strategic message being delivered.

 

There are many who have poked fun at such a comment, but as I have always been taught, he who laughs last, laughs the hardest!

 

http://www.level3.com/index.cfm?pageID=491&PR=916

[Guest longinvestor]

I don't know ValueCarl....

I was also very disappointed with Level 3 latest results. These guys ................... A sale would make sense to me since I am starting to believe that Crowe won't get it done. Watsa and Hawkins have been very patient and I think it is time for them to ask some tough questions. Is it the management, barriers by other telcos, technological advances? Something does not jive here IMO. Patience is a virtue, but denial is what?

They were even entertaining the idea of "accretive" acquisition on the conference call! How do you do that with a debt structure like that?

Cardboard

Good points I think about being a LVLT holder for many years. I believe that a sale of LVLT is a foregone conclusion, not speculation. In fact they essentially put themselves "for sale" in 2007/08(not sure of the exact date). Crowe dropped a small comment or so many quarters ago. Nothing further has been "said" but SEAM/FFH being the major owners will have a say in the eventual sale.

Most interesting to me is the pricing behavior shown by LVLT in the last 3 years versus the previous 10. They were clearly known to give away price, in the name of Silicon economics and such. Whether that was the cause of all their troubles is a moot point. In the plast three years, it is clear that they only go after good margin business, which may well explain the lack of growth the industry is seeing. They seem, to let low margin business go. Drawing a parallel to FFH, their Bellsouth, Alltel businesses are now in "runoff". This has been a big factor in them not keeping their topline growing. It appears they are happy to let this biz go.

 

It is the same thing as putting lipstick on the pig. Who would'nt like to see a fresh coat of paint and perfume inside of a used car you are about to buy? My 2 cents is that SEAM wants a good selling price for the biz.

[Guest ValueCarl]

LongInvestor, I believe you're selling your friends at Fairfax along with LVLT short. Then again, you're already on record, in an uncanny way, that nothing favorable would happen to this name in Q2 now behind us, and Q3, where we are. Kudos for that!

 

Quick question though as your writing seems to indicate a contradiction.

 

<I think about being a LVLT holder for many years.>

 

Have you been a holder for many years while you're hoping and praying that they finally sell this pig from Omaha?

 

I know you had indicated picking up some shares, recently, post Q2's disappointing results from a blended growth standpoint.

 

I digress from my main point, however.

 

If this company's internet backbone is the key to the internet's long term success, as I believe it is, then I don't know if there is enough 

LIPSTICK on the planet to ready it for sale when pondering its ultimate lV.

 

I also look forward to that heavy "interest expense" line turning into operating "profits" in the not too distant future as well.

 

I encourage you back to reading Jubilee Prosperity's take on the balance sheet metrics which continue being vastly overlooked. imo 

 

 

[Guest longinvestor]

LongInvestor, I believe you're selling your friends at Fairfax along with LVLT short. Then again, you're already on record, in an uncanny way, that nothing favorable would happen to this name in Q2 now behind us, and Q3, where we are. Kudos for that!

 

Quick question though as your writing seems to indicate a contradiction.

<I think about being a LVLT holder for many years.>

Have you been a holder for many years while you're hoping and praying that they finally sell this pig from Omaha?

....expense" line turning into operating "profits" in the not too distant future as well.

I did not come across clearly in my post. I do not want them to sell this company. I'm willing to wait for another 15 years until the true IV of this company becomes clear to Mr. Market. Yet, Longleaf et al owe returns to their shareholders and I dont believe they have thay kind of time frame/patience. BTW I own Logleaf as well and can feel the pain of them owning LVLT! I truly hope more value investors in their mold see the same POV as ours and invest for the next 10-20 years.

 

No I dont want them tobe sold for a poor price.  In used car terminology, LVLT is a lemon by popular wisdom and that has allowed me to accumulate over 8 years. Now am I in denial? I think about  that but it is a matter of perspective. If I was convinced this is a mistake I will be selling. I dont think it is a mistake. I was certainly early to ge into this stock but I'm thinking that the "fixed cost" model of this biz will make up for that in the future.

 

[Guest ValueCarl]

A "Gullibility Index," in addition to a system which seeks to identify individuals best suited to lead crucial  government positions tied to the financial markets in order to assist in protecting the best interests of the citizens' tax base. What a breath of fresh air compared to men like Greenspan, Summers, and many others. I do remember a guy who wasn't a NY Yankee, Paul O'Neill, a Treasury Secretary who seemed to have half a brain, yet somehow, they caused him to run out of town.

 

For years now, I have always opined that the best course of action for ensuring the American people become financially fit again, would be for them to wrest control of Warren E. Buffett, forcing him to dance to work in Washington D.C. as Secretary of the Treasury. We'd get lean and mean very fast if that were possible!

 

More importantly, his verbal bet on America winning in the end, would become a lock! What a waste of a financial genius to his home town turf.  :(

 

I promise this paper is "on topic" since that it discusses that horrible telecom bubble including most of the participants unwilling to perform "simple math" at the time.

 

It's this whole business of being innumerate.

 

https://docs.google.com/viewer?url=http://www.dtc.umn.edu/~odlyzko/doc/mania03.pdf

 

I came across this paper at this gentleman's site, one industry veteran who seemingly is a (3) owner, mind boggling as that sounds!  ;D

 

http://www.telecomstraightshooter.com/

 

On the other hand, one has to just keep asking themselves with respect to the internet and broadband, where are we today, and how close does it or will it resemble the MISDEEDS of YESTERDAY?

 

 

 

 

 

 

[Guest ValueCarl]

SEAM, aka, Longleaf Capital BOYZ take a larger PLUNGE into the DEPTHS of (3) shares.

 

They have increased their very large controlling stake by more than 22M shares in the Q, upping their common share position to just about 30 percent of shares outstanding.

 

I believe we have a clear case of C&C here, ladies and gentlemen. That being, CONCENTRATION and CONVICTION!

 

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

 

It is my greatest hope for the sake of American ingenuity, innovation, perseverance and justice, that Warren E. Buffett comes out from hiding in those bonds he holds, and gives this great American institution the jolt of confidence it deserves.

 

Yup, the network is the computer, stupid! imo

 

 

[Cardboard]

22 million shares is a 4.9% increase to their # of shares held and for perspective, Level 3 at June 30 represented only 2.7% of their overall portfolio.

 

So if this thing goes belly up, it is not like it will destroy their funds or their reputation. They will just say that things did not work out as expected as is often the case when investing and start talking about much larger positions such as Direct TV, Disney or Yum! Brands.

 

So the key will remain how Level 3 is doing itself to move the share price. If an investor was showing up to tell Crowe that empty promises are enough such as Peltz or Icahn it could change things.

 

Fairfax could do something. They are not a mutual fund like SEAM so they have the resources and know how to do M&A, restructuring and the like. They have been hurt by the Asper's with Canwest when they refused to sell their Australian business. It was not as high as Asper wanted. So they walked and then the company went bankrupt. It was a big loss for Fairfax. Abitibi is another one, although they hold debt instead of the stock. They may do better, but they could have also been tougher with management to get their house in order before filing for bankruptcy.

 

I think that there is a difference between activism that seeks only short term performance by forcing sales of healthy companies and activism that seeks to save companies from failure. Some managers are over confident and keep seeing a bright future while reality says otherwise. SEAM and Fairfax have saved Level 3 because if it had not been for them, terms for loans would have been much higher likely forcing a restructuring. Crowe should understand that their support is not a license to do whatever for as long as he please. When you cannot deliver any growth in sales during an economic recovery and during a continued surge in bandwidth usage there is a problem.

 

Cardboard

[Guest ValueCarl]

Whoa!, Cardboard.

 

Much of what you say is valid; however, this talk about "saving" the enterprise from reorganization is POPPYCOCK!

 

SEAM and FFH's positions relative to percentage portfolio totals were significantly higher during the period; therefore, if their financing at such USURY RATES were about saving anybody, it was first and foremost about saving their own asses! Nothing of nobility there, and I haven't seen "The Christ" return to earth yet!

 

Of course, I wasn't privy to the inside negotiations during the climax of the credit implosion along with the loss of traditionally revered bankers like those at Merrill who Crowe has had love affairs with, sometimes costing his owners tens of millions in important capital because of stupid hedges he agreed to with them, but this "sweetheart deal" fell squarely on their relationship with Patel, I am sure!

 

I don't understand why anyone is surprised (3) climbed the finance hill, however.

 

Why? Because Crowe has warranted early on that, "money is NEVER a problem for (3)!"

 

Back to Buffett, then.

 

If he wants to talk all this cute SMACK about believing in the successful outcomes that will return America to a leadership role in global markets again, then he should be standing at the plate and backing his close friend, Walter Scott, this great builder as he describes him, by hitting today's FAT PITCH out of the PARK!

 

At the same time, this interest rate pedal that SEAM and Fairfax are PUSHING on, continues to kill this company from MNA, in addition to success based opportunities surrounding more build outs than less.

 

How many times do we keep hearing about (3)'s network being 500 feet away from 100K enterprise buildings across the US, yet at the same time, the needle of their ON NET buildings for years has hardly moved!

 

One last thing though. Rather than excusing SEAM for such a small stake in a company going bust, why don't you answer why these buffoons keep allocating VALUABLE CASH on the part of their investors, into this HORRIBLE, DESTRUCTIVE entity?

 

Here's some advice from Forrest Gump and Charles T. Munger respectively, with respect to what you're saying they're doing:

 

"Stupid is as stupid does," and,

 

"The definition of insanity is doing the same things over and over again, while expecting a different result."

 

As an owner, I want nothing more from the whole lot of these financial magicians, than "value enhancing" methods and tools which drive this internet infrastructure business to its highest heights, consistently, persistently and with sustainability over time!

 

Excuses won't cut the mustard any longer. Get the damn job done, and put it to whoever they must in order to accomplish that! imo

 

 

 

 

[Guest ValueCarl]

Peter, your undaunted bearishness must be commended not unlike my incessant bullishness.

 

In all due respect, however, you're not saying anything much more different than Cardboard earlier while also neglecting to say why these smart men who are hedged down to break even or better continue to STICK their HEADS in the TOILET BOWL fishing for more DIRTY TOILET PAPER!!!

 

There's much to be learned from Buffett too, with respect to penny stocks, especially great companies that had somehow become "penny stocks" over the years! It doesn't matter whether they were start up companies from the ground up, or bellwethers that fell down, when he analyzes. Graham-Newman shareholders' Geico in the middle nineteen hundred seventies, is just one example that comes to mind!

 

He'll be showing up again in this name, beyond the bonds in some shape or form again one day I'm sure, and I continue to hope that guys like you are deep in the middle of your UNDAUNTED BEARISHNESS when he does!

 

The game of money is very visceral, literally being "zero sum" in many respects while paying attention to time, therefore, I look forward to the day when you have yours taken from you! You're a bit too smarmy towards a deadbeat's cause for me. imo