Level 3 NOL's

[Cardboard]

I am starting to dig deeper into Level 3 Communications and I have a question relative to their net operating loss tax carry forwards.

 

They mention that due to some ownership changes with holders of 5% or more of their equity (think Southeastern Asset Management and Fairfax) that they lost 50% of their NOL's. So, it is now down to $5.2 billion. They also say that they could lose another 50% if more is done.

 

The main issue with Level 3 remains its capitalization since the company generates a fair bit of cash before interest. So if a well capitalized and profitable buyer was to show up, pay off all debt and offer something like $3 a share and assuming that they can utilize the remaining $5.2 billion in NOL's against all earnings (Level 3 and theirs) it could be a good deal for them.

 

So, how does it work if someone like Google takes it out? Will NOL's remain at $5.2 billion, go back to $10.4 billion or be cut? Can they take the full $5.2 billion in tax loss carry forwards and eliminate their taxes for the next 2 years? It would be quite an asset, almost as good as cash.

 

This is pure speculation on my part, but I am interested to learn the mechanics.

 

Cardboard

[Packer16]

My understanding is that if there is a change of control, all the historical NOLs are limited to the AFR rate times the equity value of the transaction per year.  This in effect reduces the NOL significantly upon sale.

 

Packer

[valuecfa]

I am starting to dig deeper into Level 3 Communications and I have a question relative to their net operating loss tax carry forwards.

 

They mention that due to some ownership changes with holders of 5% or more of their equity (think Southeastern Asset Management and Fairfax) that they lost 50% of their NOL's. So, it is now down to $5.2 billion. They also say that they could lose another 50% if more is done.

 

The main issue with Level 3 remains its capitalization since the company generates a fair bit of cash before interest. So if a well capitalized and profitable buyer was to show up, pay off all debt and offer something like $3 a share and assuming that they can utilize the remaining $5.2 billion in NOL's against all earnings (Level 3 and theirs) it could be a good deal for them.

 

So, how does it work if someone like Google takes it out? Will NOL's remain at $5.2 billion, go back to $10.4 billion or be cut? Can they take the full $5.2 billion in tax loss carry forwards and eliminate their taxes for the next 2 years? It would be quite an asset, almost as good as cash.

 

This is pure speculation on my part, but I am interested to learn the mechanics.

 

Cardboard

 

 

They will never get back the NOLs lost in 08'. That is gone forever. Note that this is not a valuation allowance, but an ownership change limitation. If Google or anyone else takes it over, then this would also be considered an ownership change. They'll be cut again. This would further greatly reduce the remaining value of the NOLs, that are currently in the $5.2 billion range. If Prem or Hawkins get trigger happy and up their stakes during the testing period (enough to trigger), then this would also reduce their value. I'm sure they are aware of this. Though it is difficult to imagine that the $10 billion in NOLs they once had would ever get used anyway. So the loss of the $5 billion or so in NOLs in 2008 is really a non-event.

[Guest ValueCarl]

Not too long ago I had visited this topic under the FFH group heading. At some point, I was aggressively and viciously attacked, which is O.K. because let's just say, most of the time, I can dish it out as much as I can handle it when it's thrown at me! I believe I suggested that Crowe's attempt for legislative relief failed miserably when visiting none other than Jay Rockefeller in D.C., during the past year or so. I believe I also implied that FFH, specifically, may be managing future "trigger events" by "distributing"  shares like "converts" tied to filings in public or private transactions after providing financing versus adding such exposure into the percentage change math. 

 

Valuecfa, you're a smart guy so rather than lambaste you for this comment, let me explain why I expect the underlying owners who might trigger such an event would NOT want to do so!

 

<Though it is difficult to imagine that the $10 billion in NOLs they once had would ever get used anyway. So the loss of the $5 billion or so in NOLs in 2008 is really a non-event.>   

 

If you don't trust management teams, or don't believe these large institutions trust them any longer, if ever, then what I write about James Q. Crowe and share here can be considered blasphemy, so, believe what you will! And, by all means stay away from this destructive company who has killed its first born including subsequent births more than any ancient Egyptian parent's worst nightmare!     

 

I believe they will cut off their right arms before they let more of these valuable offsets to future income streams become lost again, beyond what one dubious, pseudo senator from a banking dynasty in West Virginia disapproved previously! Personally, I am sick and tired of life long politicians in D.C. posing as the Peoples choice. However, I digress, so that's another story for another day!

 

Last Monday, when Crowe appeared in Florida, he said a few interesting things about the opportunities which loom large at (3) still twelve years into this.

 

In the enterprise space, for example, (3) is just 500 feet from 100K buildings from which an addressable market stands at $30B today, of which (3) only owns three percent or approx. $1B market share. That's current spend, and excludes additional on net services they could sell once connections to those buildings are made. On the negative side, currently (3) only has 8K buildings connected at last check. This is just one facet of (3)'s business, to be sure, so open or close your imaginations as you will towards the development and power of the internet.

 

I think the most important piece addressed in his valuable discussion at this conference surrounded (3)'s 10 empty conduits out of 12 initial conduits buried in Mother Earth USA. For $500M and six months time, (3) is ready to rock and roll with the newest fiber required to meet the insatiable bandwidth demand which keeps heading for us like a Burlington freight train carrying a Rock Star! To reiterate, that's just the good ole US of A while excluding their European ops as well as owned real estate-not disclosed-and a valuable content distribution network(cdn) patent portfolio. 

 

How much would it cost a competitor to replicate just ONE of those CONDUITS, if one ever could, i.e., building permits to dig up the country including metropolitans again? The visionary and fearless leader of this world's most advanced communications network says $6-8 billion each!

 

Have a listen for yourselves, and by all means make your bets, long, short or PASS!

 

Right Peterburkeceo?????????????  ;)

 

       

 

https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=195926&sessionid=1&key=187D8E6E9650A0E1C1B54A946E686B71&sourcepage=register

 

 

[valuecfa]

 

<<let me explain why I expect the underlying owners who might trigger such an event would NOT want to do so!>>

 

<<I believe they will cut off their right arms before they let more of these valuable offsets to future income streams become lost again>>

 

I agree. No owner would WANT to cause a section 382 event. That would obviously be foolish.

 

I only scanned LVLT's filings for a few minutes, but i didn't notice them protecting these NOLs in any way. I didn't notice any language that stated any caps on ownership, or any other methods that may be used to preserve them. I am actually quite shocked that they are not preserving these from further triggers, since the remaining NOLs have substantial value. (Perhaps they are and i just missed it, during my quick scan).

 

It is the excess NOLs that have little to no value, in my opinion. What might be considered excess depends on how much you think they might earn over the next 20 years. Also worth factoring in is that they are likely to add further to these NOLs over the near term.

 

I won't make any judgments about the CEO or the business itself. I don't know much about the CEO other than a few short opinion pieces here and there. And frankly LVLT's business is over my head. I'm not very savvy at all when it comes to their business, its potential, its future competitive threats, or disruptive technology that may affect it, so I'll refrain from opining on something I know little about. As a Fairfax shareholder I certainly hope LVLT uses up every last cent of their tax assets.

 

 

 

[Guest ValueCarl]

If you listen, you will understand that the company remains a very highly "levered operating factory" from which large portions of one dollar's revenue falls to the bottom line. The factory runs on $180-200M of fixed maintenance capex annually. There's $525M annual interest expense which ultimately, becomes a perpetual refinancing, reduced outlay, credit upgrade story tied to revenue growth, which hopefully, is returning to their business as I write.

 

They maintain gross margins of 80 percent which is defined as (3)'s owned network tied to the fixed factory costs identified above, meaning they pay 20 cents per dollar to third party carriers for capacity they do NOT own or control themselves. On the other hand, T and VZ, maintain 40-50 percent gross margins comparatively causing them to spend 50-60 cents per dollar to other carriers out of territory. It seems better to be a "NEUTRAL CARRIER" like (3), in this regard.  Another 15-20 percent per dollar is in SG&A. The balance is success based capital and/or speculative capital both requiring very rapid investment paybacks, i.e, eighteen months. That's an EBITDA margin of 60-65 cents on the dollar! 

 

In my mind, they have chosen to maintain approx. $6B in net face value debt for a long period because, they believe this is the right size debt for the long term revenue prospects of their Big(3) communications company. Their revenue sand box and corresponding market cap is triple digits, ultimately, not unlike Goog, who wouldn't roam the planet without them.

 

Watsa, etal, are no fools. They will see those NOL's absorbed before expiry adding VALUE to EQUITY. imo     

 

             

[Guest ValueCarl]

Slide 6 identifies $25B "cost new" estimated total gross PP&E since DAY 1-twelve years still counting-inclusive of key intellectual property patent rights purchased and being partnered with IBM tied to content distribution networks(cdn's).

 

(3)'s current market cap= 2.62B, with a current enterprise value of approx. 8.62B.

 

(3) is unencumbered by legacy pension, healthcare and union responsibilities burdening the other Big(2).

 

This is a most compelling story of high stakes poker! In the past, more nefarious groups of players have had their way with this name not excluding illegal methods. Pay back is often times a bitch! It might as well be (3), and there is no better time than the present. imo 

 

http://files.shareholder.com/downloads/LVLT/865453384x0x352714/344d935f-774e-416a-91fe-cfdd3886b7ec/Investor%20Presentation_Feb_2010.pdf

[Guest ValueCarl]

Without skipping over your concern, I'll reiterate the same thing I suggested earlier.

 

<I only scanned LVLT's filings for a few minutes, but i didn't notice them protecting these NOLs in any way. I didn't notice any language that stated any caps on ownership, or any other methods that may be used to preserve them. I am actually quite shocked that they are not preserving these from further triggers, since the remaining NOLs have substantial value. (Perhaps they are and i just missed it, during my quick scan).>

 

As investors, if we are to do as Buffett prescribes, that is, "trust the management team," then we must apply the same principles to the institutions who are aligning with the management teams we are trusting, in this case, Fairfax, Longleaf or whomever.

 

When you can tell me why the "shelf filings" after an important financing event, and to whom Fairfax is selling to, especially in "private transactions," I'll begin to worry about the lack of (3) addressing their efforts to preserve them in the filings.

 

Stated differently, I believe Fairfax is quietly ensuring the percentage triggers are NOT breached. To expand further on risk factors and SEC filings, and the like, if I took to heart every risk factor contained in all public company documents, I would bury my head in the sand, and all of my cash, discretionary or otherwise, with it! Of course, I would suffocate by committing suicide, so you get the point! 

 

That's not to say there aren't serious notes that require very careful consideration prior to investing, however.         

 

[valuecfa]

<<<As investors, if we are to do as Buffett prescribes, that is, "trust the management team," then we must apply the same principles to the institutions who are aligning with the management teams we are trusting, in this case, Fairfax, Longleaf or whomever. >>>

 

You have much more faith in institutional money managers and management teams than I do. Keep in mind that there are shareholders other than longleaf and fairfax that can cause a section 382.

 

 

<<<Stated differently, I believe Fairfax is quietly ensuring the percentage triggers are NOT breached. To expand further on risk factors and SEC filings, and the like, if I took to heart every risk factor contained in all public company documents, I would bury my head in the sand, and all of my cash, discretionary or otherwise, with it! Of course, I would suffocate by committing suicide, so you get the point! >>>

 

Fairfax can't quietly stop anybody from creating a section 382 event. If there are no ownership limits, then they can be breached at any given moment. Fairfax and Longleaf can only manage their own respective ownerships within the company. They have no control over other shareholders decisions. And with no limits in place, neither does LVLT mgmt.

 

 

[omagh]

Good point, but how does one value this invested capital?  If one looked at total invested capital in railroads, it probably dwarfs the total valuation of the industry.  The liquidation value of the assets is probably how this company should be valued and these assets definitely have value to a private buyer, just not $25B, but likely much higher than $2B equity value and possibly higher than the $8B enterprise value.

 

-O

Slide 6 identifies $25B "cost new" estimated total gross PP&E since DAY 1-twelve years still counting-inclusive of key intellectual property patent rights purchased and being partnered with IBM tied to content distribution networks(cdn's).

[Guest Bronco]

For what it is worth, I believe 382 won't kick in unless there is ownership changes of 5% or more shareholders. 

[Guest ValueCarl]

Now that their previous integration mess appears to be behind them in earnest, the best way for them to be valued will be by their ability to produce copious cash flows organically, in addition to the completion via consolidation of important LH and METROPOLITAN networks that will acclimate most productively onto (3)'s backbone.

 

In this regard, I find it offensive for people to DISCOUNT that $25B number!

 

Let's hope our financiers have administered the GREEN LIGHT in celebration of the soon to be experienced US holiday called ST. PATRICK's Day.

 

If not, SEAM's board member representative, a man named MERCHANT, was brought aboard to ensure some kind of VALUE is extrapolated from this star ship ENTERPRISE, similar to his work at JAVA, previously called Sun Micro Systems(SUNW).

 

From this perspective, $3 pps by any outsider taking over this entity, assuming it's close to possible, is a JOKE!

 

Ask peterburkeceo about that! Peter is whispering about some TWTC merger with (3), whereby, incumbent management including CEO and CFO are REPLACED with TWTC leaders. IMO   

 

[Guest ValueCarl]

What (3) should do, is SELL ONE PIPE to the US government or any US defense company in order to secure any sensitive data that Jay Rock yaps about when he performs false flag operations which act as a FEAR MONGERING TACTIC for people like him to gain control of the internet!

 

After they pay (3) $6-8B in cash for such a privilege, (3) can retire its DEBT finally, and then curmudgeonly spread sheet animals or more liberal ones, can DISCOUNT NPV of CASH to the HIGH HEAVENS! IMO   

[twacowfca]

Am I correct in my understanding that a takeover by a company in a related business such as a telecom would not be an event that would necessarily trigger a loss of their NOLS?

[valuecfa]

That would still trigger an ownership change. It would trigger an annual limitation on the NOLs. They wouldn't loose them all. The new owner would acquire some of their NOLs, but much would be lost.

 

For the sake of simplicity, i'll show you an example:

 

Hypothetical Company has NOL’s of 115

Goes through an ownership change

Company’s equity one month prior was $90

Annual deduction = 90*5% = 4.5M

Even if you can take all over 20 years

20(4.5) = 90M

PV (@ 10%) = 4.5(8.51) = 38.3M

Vs. taking all of 115 next year 115/1.1 = 104.5M

 

So, the difference caused by the ownership change in this case was quite significant. In general, the lower the market cap in conjunction with the higher the NOLs, the more that will be lost upon an ownership change. So if you ever see a tiny company with say a $10 million market cap and $1 billion in NOLs, then an ownership change would wipe out almost all the NOLs. If a $1 Billion company with the same amount of NOLs goes through an ownership change, then they will lose some of the NOLs, but not loose them all as would be the case in the smaller company.

 

Also, keep in mind that in this example the 38 million is the PV of the NOLs. However, an NOL is only worth about 35% of each dollar of NOL (and then discounted to the present value). So the ACTUAL value of the 115 million in NOLs, adjusted for ownership change, and then discounted to the PV of 38 million, in this example would be about $13 million.  And it is only even worth that if they manage to earn a profit.

[twacowfca]

That would still trigger an ownership change. It would trigger an annual limitation on the NOLs. They wouldn't loose them all. The new owner would acquire some of their NOLs, but much would be lost.

 

For the sake of simplicity, i'll show you an example:

 

Hypothetical Company has NOL’s of 115

Goes through an ownership change

Company’s equity one month prior was $90

Annual deduction = 90*5% = 4.5M

Even if you can take all over 20 years

20(4.5) = 90M

PV (@ 10%) = 4.5(8.51) = 38.3M

Vs. taking all of 115 next year 115/1.1 = 104.5M

 

So, the difference caused by the ownership change in this case was quite significant. In general, the lower the market cap in conjunction with the higher the NOLs, the more that will be lost upon an ownership change. So if you ever see a tiny company with say a $10 million market cap and $1 billion in NOLs, then an ownership change would wipe out almost all the NOLs. If a $1 Billion company with the same amount of NOLs goes through an ownership change, then they will lose some of the NOLs, but not loose them all as would be the case in the smaller company.

 

Also, keep in mind that in this example the 38 million is the PV of the NOLs. However, an NOL is only worth about 35-40% of each dollar of NOL (and then discounted again to the present value). So the ACTUAL value of the 115 million in NOLs, discounted to the PV of 38 million, in this example would be about $13 million.  And it is only even worth that if they manage to earn a profit.

 

 

Thank you valuecfa.  That's the clearest explanation I've seen about

the limits on how large amounts of NOL's in relatively small companies could be valued in a takeover by a company in a related business.

[valuecfa]

 

Thank you valuecfa.  That's the clearest explanation I've seen about

the limits on how large amounts of NOL's in relatively small companies could be valued in a takeover by a company in a related business.

 

Your welcome. Though this is just the cliff notes version. It can get a a lot more complicated in various scenarios that can change the outcome (continuity of business and various other rules with their own testing periods, bankruptcy exceptions which are very hard to comply with, classification of stock vs. asset purchase, ownership change occurring in chapter 11, troubled debt trading prior to ownership change, etc). But i think you get the idea.

[Guest ValueCarl]

valuecfa,

 

Have you looked into Leucadia's (LUK) purchase and subsequent sale of Wiltel to (3), and/or Icahn's recent machinations at XOHO Communications to wrest control of existing NOL's for Icahn Enterprises(IEP)?

 

In both cases, unrelated or non telecom companies have moved NOL's from the core business to be applied against their diversified companies' gains.

 

Icahn's financial engineering art is not complete yet, however, i.e., SALE.

 

I realize your efforts are for determining the value of this potential asset to an acquiring entity, although my focus has been why an institution including FFH would not want to jeopardize such an asset continuing forward as a vibrant business. 

 

Since a sale to a 3rd party cannot be entirely ruled out, what those two non-related holding companies did or are doing might offer some insight. 

 

 

 

[Guest Bronco]

I haven't followed the entire thread, but has anyone looked at the NOL's at LUK?  I believe they have a subsidiary with huge NOL's, and they are using that subsidiary as their acquisition vehicle.  I am assuming they are stuffing that sub with cash and then each new acquisition that sub makes will generate potential income to offset any NOL's.  Don't know if these NOL's are of the 382 variety, but I do know the Cummings/Steinberg (hope I got that right) are not happy with putting a valuation allowance on these NOLs.

 

 

[Cardboard]

Thank you as well Valuecfa on the tax explanation. In any case, I hope that they work to protect the remaining $5.2 billion. Losing $5.2 billion is already bad enough.

 

IMO, Level 3 management has been really strong on vision and average at best on execution. They have a terrific asset with a replacement value in the billions, but its usage to date is weak. For example, why waiting so long to attract entreprises outside telcos, government and other very large data users? The initiative only began in 2006... This replacement value has not provided any margin of safety because it took way to long to earn enough cash flows from this asset.

 

Then I have a real problem with their financing culture. Some of their convertibles have been redeemed for shares in recent years at much less than their conversion price. Here are the prices: $2.14, $2.71, $3, $3.07. We also have $875 million worth of convertibles converting at $1.80 a share. So the end result is massive dilution to long term shareholders. You have people who may end up absolutely correct about the business, but totally wrong on the share performance. So I can feel the pain of investors who bought since 2000 at much higher prices.

 

Fortunately looking forward, IMO ValueCarl is correct that the opportunity to finally make big cash flows is there near term. If you add $1 billion in revenues to 2009 results and very little to costs since the base is already in place, you can see a huge impact on profitability. Timing seems to be everything with this one and I am not even sure that it is right this time.

 

Cardboard  

[Guest ValueCarl]

Here are more details for examining the ramifications tied to NOL's if (3) were to remain stand alone as I suspect, or is purchased by a third party. To be candid, I do not know the rules that were in force when LUK sold Wiltel to (3), and removed the NOL's to their shell in order to offset future gains on newly acquired businesses. FYI     

 

In addition, if an ownership change under Code Section 382 is triggered, a corporation’s “built-in losses,” which include certain built-in deductions, that are recognized during a five-year recognition period after the ownership change, are treated as pre-change losses subject to the Section 382 Limitation. The combination of these rules means that a buyer of a corporation with sizeable NOLs and other tax attributes, such as built-in losses, may find that the tax attributes actually possess a relatively low cash value as a result of a change of control.

 

A corporation is considered to undergo “an ownership change” if, as a result of changes in the stock ownership by “5-percent shareholders” or as a result of certain reorganizations, the percentage of the corporation’s stock owned by those 5-percent shareholders increases by more than 50 percentage points over the lowest percentage of stock owned by those shareholders at any time during the prior three-year testing period. Code Section 382 only counts ownership increases; to consider decreases would amount to double-counting. Five-percent shareholders are persons who hold 5% or more of the stock of a corporation at any time during the testing period as well as certain groups of shareholders (based typically on whether they acquired their shares in a single offering or exchange transaction) who are not individually 5-percent shareholders.

 

Importantly, the Section 382 Limitation is zero for any post-change year if during the 2-year period beginning on the change date the new corporation does not either (i) continue the old corporation’s historic business or (ii) use a significant portion of the old corporation’s historic business assets in a business at all times during that 2-year period.

[Guest ValueCarl]

Although (3) has yet to issue any "preferred shares" from their "shelf", going back to 2002 when Warren Buffett invested in their Junior Converts at strike price $3.41, it was stated that he would have preferred "preferred shares" which due to some filing constraints in Delaware tied to certain operating benchmarks precluded them from doing so at the time. imo   

 

Sometimes a new equity investor will wish to preserve the net operating losses, and so may be more than willing to work with management to prevent an ownership change. Certain rules under the Section 382 regulations regarding stock options make this planning difficult because certain stock options are “deemed” exercised if their exercise would trigger a Section 382 ownership change.

 

Sometimes planning can be accomplished with “pure” preferred stock because it does not count as stock for purposes of measuring owner shifts. Stock (often called “Section 1504(a)(4) stock”) that is limited and preferred as to dividends, does not participate in corporate growth to any significant extent, has redemption and liquidation rights that do not significantly exceed the issue price of the stock, is not convertible into another class of stock and is not entitled to a vote (except as a result of dividend arrearages) is not considered stock for determining whether an ownership change has occurred. Of course, investors may be unwilling in this financial environment to take such “pure” preferred stock because of its lack of voting rights.

 

[Guest ValueCarl]

Recently, I referenced peterburkeceo's whispering comments in other venues regarding the much smaller, far more limited, Time Warner Telecom(TWTC), somehow doing a reverse takeover of (3).

 

It's interesting that they're getting specific mention as being a major beneficiary of the sweeping FCC over haul rules contained in their "National Broadband Plan" released and being submitted to the US Congress as a next step after a commentary period by industry participants takes place. 

 

At the same time, one of (3)'s empty "PIPES" and the "SPECTRUM" which they own as a result of one of their earlier acquisitions, some years before, doesn't find its place.

 

Some things NEVER change on Wall Street, a very big game of "LIARS POKER!" imo

 

Mid-size broadband providers, such as TW Telecom and Cbeyond, are shaping up to be the plan's biggest beneficiaries, gaining access to more subscribers and the rights to federal funds to expand their networks.

 

 

The agency would also seek up to $16 billion from lawmakers to build and operate a dedicated network for public safety responders. The agency said it could raise more money from auctioning the spectrum intended for wireless use.

 

 

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/16/AR2010031600008.html?wprss=rss_technology

[Guest longinvestor]

 

 

IMO, Level 3 management has been really strong on vision and average at best on execution. They have a terrific asset with a replacement value in the billions, but its usage to date is weak. For example, why waiting so long to attract entreprises outside telcos, government and other very large data users? The initiative only began in 2006... This replacement value has not provided any margin of safety because it took way to long to earn enough cash flows from this asset.

Then I have a real problem with their financing culture. Some of their convertibles have been redeemed for shares in recent years at much less than their conversion price. Here are the prices: $2.14, $2.71, $3, $3.07. We also have $875 million worth of convertibles converting at $1.80 a share. So the end result is massive dilution to long term shareholders. You have people who may end up absolutely correct about the business, but totally wrong on the share performance. So I can feel the pain of investors who bought since 2000 at much higher prices.

Cardboard  

I am vested in Level(3) since 2002 and have followed this developing story without pause. While it is difficult to not see the view points posted here, re: LVLT managements execution and financing culture, the environment (3) finds itself makes it very easy to understand why they did as they did.

The new telecom is akin to the aftermath of a volcanic eruption. IMO, there have been two “large” volcanic events in play which dwarf (3)’s execution issues.

The first, ….

At the feverish pitch of the technology bubble, (3) had 30+ network companies competing with them. Now there are less than a handful left.  And (3) has absorbed many of them….simply retired their assets…there’s most of the dilution. If it was not(3) it would have been someone else. Think of it as a sunk cost, literally sunk in the earth.  So much for technology  and the misplaced greed that drove the bubble.  “Too much capital chasing too few ideas”

The second,….

The decline in disposable incomes in the US and EU has meant people have less (lot less) to spend today than 20 years ago.  My tel+cable+internet bills in 1996 was $300 to $400 (make international calls). Today it is a clean $130 or less. And I get a lot more for the money.( And cell phone bills are not included in this. It is just a matter of time before it does). And I don’t count myself in the 70+% of the population who have less than $50 spending money for these kind of these things.  IMO, this is, in an unprecedented fashion taking the 100+ year Bell legacy down to it’s knees.  The 50 year Cable legacy is also wobbly.

Both of the above are ecosystem type changes and 12 years happens to be a fraction of the gestation time for these kind of things to unfold. As Crowe correctly stated back in 2001 in that OID interview, economics, rather than technology is in the driver’s seat.

(3) is doing the right thing, thanks to their low cost leadership position. Thanks to SEAM, Prem et al for extending the runway, all they need to keep a seat at the table when the new ecosystem is in place. Who knows, this could be another 3, 5, 10 plus years.

Poor execution is the silly syllabus of the (3) story.

 

[Guest ValueCarl]

Whoa!!! longinvestor!

 

Never has a more true statement been declared in relationship to the hardships (3) owners have had to endure. Even tied to the integration mess, a necessary strategic move to advance the communication line radius' closer to end users in order to avoid costly access charges, notwithstanding.

 

Have you bought some (3) shares today?  ;D

 

<Poor execution is the silly syllabus of the (3) story.>