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I know Level 3 has been discussed in the past on here, with a few big proponents (ValueCarl & a couple others).

 

Has anybody been revisiting this one as it has plunged under $1?  

 

Just curious.  I've done hardly any research on it myself.  Just noticed it was near yearly lows on huge volume as of late, and Crowe sold a bunch of shares sometime late summer I believe.  I assume the story has been the same for ages:  Great assets, gobs of debt, can't turn a profit.

 

Cheers

J

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Article from this morning's G&M about potential growth in smartphone use:

 

http://www.theglobeandmail.com/news/technology/duncan-stewart/economics-of-wireless-means-data-prices-bound-to-rise/article1784965/

 

 

There's nothing really very new in the article, but presumably the bulk of the 100-fold increase in smartphone data use will have to employ the existing internet backbone....of which LVLT has a good chunk!

 

 

SJ

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Guest ValueCarl

What's up doc? There's this board over at Yahoo Finance, if I want to engage in "no can do" darker side of the coin conversations.

 

BTW, with Bill Miller confirmed to have jumped ship with at least 54MM shares in Q3, there may be a lemming effect straight ahead!

 

Look towards the cliffs over yonder for more herds jumping!  ;D

 

For that "bandwidth sucking sound" which only (3) has the "capacity" to facilitate moving ahead, I give you these valuable tidbits. Pay particular attention to Crowe, one "keynote speaker" in link #2. And, of course, "do some math" because "if you do the math......" errrrr, you must become bullish on (3) at some "inflexion point."  ;D

 

http://finance.yahoo.com/news/See-me-ObiWan-Kenobi-apf-3487631850.html?x=0&sec=topStories&pos=8&asset=&ccode=

 

http://link.brightcove.com/services/player/bcpid70463528001?bclid=90670357001&bctid=90054674001

 

http://www.level3.com/index.cfm?pageID=491&PR=956

 

Finally, for those Buffett optimists out there looking for "good businesses" with large moats, here's my invitation to the magical mystery tour.  8) 

 

 

 

 

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Guest ValueCarl

Hey doc,

 

In all due respect, here's the answer to your question regarding Crowe sales. As importantly, the analyst asking the question, who has affectionately become known as, "The Mouse Lady," because in her bearish state many moons ago suggested that, (3)'s pipes would be better served with "white mice" running through them, has had a "two dollar price target" on the shares for at least two quarters now.

 

Thanks to "seekingalpha.com" for providing the transcript, for which I am in compliance with their copyright requests. Do you hear me Sanjeev!  ;D   

 

http://seekingalpha.com/article/233708-level-3-communications-ceo-discusses-q3-2010-results-earnings-call-transcript?part=qanda

 

Operator

 

We’ll move now to D.A. Davidson and Donna Jaegers.

 

Donna Jaegers – D.A. Davidson

 

Hi, good results. Two quick questions for you. Can you talk a little bit more about the large contracts? I thought Time Warner Cable is building their own CDN network, I’m assuming maybe that’s the one that you guys want and then I got another question for Jim?

 

Jeff Storey

 

We can’t. We’re not in a position to talk about specifics at this point.

 

Donna Jaegers – D.A. Davidson

 

I hate to put you on the spot on this one, but you sold 2 million shares of your stock during the quarter. With all those good news and the stock rebounding, can you give us a little more explanation over why you would sell your shares now?

 

Jim Crowe

 

First of all, as you may know, the shares were all sold to members of the Board. So, I would hope the signaling is clear. I had three years of current cash income, salary and bonus that I believe were appropriate to results of the company, but we’re certainly far below historical levels and far below other CEOs. I had a cash flow issue to deal with and hopefully dealt in a way that sent the positive signal to investors.

 

Donna Jaegers – D.A. Davidson

 

Thank you.

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Guest ValueCarl

NBNco in partnership with their Australian government are anticipating $43B in expenditures to build a network with specs like (3), an ability to reach 90 percent of their population. 

 

Quigley likes to quote "trends" like Crowe's boss, Mr. Walter Scott, a Warren E. Buffett partner. He uses CSCO, a (3) partner, as one of his "sources."

 

"Fiber is the only way" to provide the speeds needed, according to him in addition to Crowe. Why not all "wireless"? Inherent limitations caused by "distance" as well as limited "spectrum."

 

When will the US government embrace the (3) network, exclusively, FULL SPEED AHEAD? For their citizens' benefit, it better be soon. imo 

 

 

http://webcast.viostream.com/Player/Default.aspx?viocast=2229&auth=01393d54-7be0-4e68-9227-3cf2723d1905&enableCache=True

 

http://whirlpool.net.au/wiki/nbn

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Guest ValueCarl

If Mr. Buffett is really "all in" on his bet "with America," he will not miss the (3) ride of his life. Bill Gates will prove it to him, in about one NY minute, "succinctly." He has been in the equity before(2002), he'll be there again! Don't ask Alice about this one! imo

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Guest ValueCarl

Big (3) is catching a nice bid today on this Content Distribution Network(CDN) news!

 

It has remained criminal, to watch Goldman use their "control stake" in Limelight(LLNW), as well as market clout to move the price of that security's own market cap, for the little share they maintain of the whole CDN space, and not "owning a physical network," on the other hand. This has been going on from about  $3.50 pps in less than three months.

 

There were a number of Goldman analysts on (3)'s recent conference call, including some young, Scott Goldman, all curious about when (3) will begin doing MNA dances again. Personally, I'd prefer to see (3) kill this competitor if possible, versus satisfying a Goldman premium price exit plan to benefit from. imo

 

At the beginning of this year, Akamai (AKAM) took the Netflix (NFLX) business away from Level 3 (LVLT) and became the primary CDN for Netflix, with at least 51% of their traffic. While it was a big win for Akamai at the time, it appears that it was short lived. Due to poor performance issues that Netflix has experienced with the Akamai network, Netflix now plans to move all of their traffic off Akamai in the coming months and will go back to only using Level 3 and Limelight.

 

http://seekingalpha.com/article/235645-akamai-to-lose-netflix-as-a-customer-level-3-and-limelight-pick-up-the-business?source=yahoo 

 

 

 

 

 

 

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Guest ValueCarl

Brker_guy, nice to be thinking in sync with you this morning. Our posts almost hit Sanjeev's wire simultaneously.  8)

 

I must add one other thing about this relentless Motley Fool pump job called Akamai(AKAM) now that (3) has confirmed the news in New York today.

 

The FACT is, they lost competing on price in addition to "quality of service" to the incumbent "low cost provider" of crucial, essential communications services the world can never forgo.

 

All while CDN remains just one niche component of an "addressable market" inside a plethora of communications products and services which (3) delivers X globe. 

 

I have always submitted that, the best laid internet protocol roads lead to Big (3)! imo 

 

  Level 3 Confirms That It Will Supply Services To Netflix      11/09 09:12 AM

 

 

 

 

  (MORE TO FOLLOW) Dow Jones Newswires

  11-09-101212ET

  Copyright © 2010 Dow Jones & Company, Inc.

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Guest ValueCarl

In the name of "circuit breakers" they halted the stock and printed a 49 cent price while announcing a "new 52 week low" in the midst of it all. More than likely, it was that dubious Chicago exchange where more criminals reside than Al Capone's glory days. That's the exchange where rampant "rebate commissions" were being manipulated by hedge fund managers trading to themselves in sub one dollar price per share stocks carving up spreads into the hundredths vs. pennies.

 

It's still hard to fathom why they were able halt it at such a "low price" in the wake of such good news except by measuring what was written above.

 

The criminal aspect of these financial markets, assuming they continue unabated without serious intervention soon, is an absolute disgrace in the name of that great lie called liquidity.

 

If the exchanges do not make an announcement to back out the trades by all participants who may have benefited, it will just be more standard operating procedure by the criminal regulating agencies overseeing this farce! Additionally, I would bet dollars to doughnuts that, the culprits who were able to "buy out" were the same culprits who would have catapulted the stock price much higher than where it continues trading right now($1.05 area)! imo  

 

Check below for free stories on LVLT the last two weeks.

There are 11 items on the Fly with pertinent information.

Sign up for a free trial to see the rest of the stories you've been missing.

November 9, 2010

13:39 EDT LVLT

theflyonthewall.com: Level 3 confirms deal with Netflix, CNBC reports

 

Subscribe for More Information :theflyonthewall.com

13:36 EDT LVLT

theflyonthewall.com: Level 3 halted due to circuit breaker rules

 

Subscribe for More Information :theflyonthewall.com

13:31 EDT LVLT

theflyonthewall.com: Level 3 cofirms recent large deal win is with Netflix, CNBC reports

:theflyonthewall.com

12:09 EDT LVLT

theflyonthewall.com: On The Fly: U.S. Mid-Day Market Wrap-Up

U.S. stocks were slightly lower as most financial companies declined, but a majority of energy stocks climbed. At midday, the Dow lost 36.86, or 0.32%, to 11,369.98, while Nasdaq gave back 5.14, or 0.20%, to 2,574.95 and the S&P lost 3.42, or 0.28%, to 1,219.82. MARKET NEWS: Exxon (XOM) gained 1.62% to $71.01, while BP (BP) rose 1.11% to $43.71....An index of Small Business Optimism gained 2.7 points to 91.7 last month, the National Federation of Independent Business said.... There were reports that private equity firms were considering leading a takeover bid for Yahoo (YHOO), and the search engine's stock gained 5.57% to $17.35. MAJOR MOVERS: Netflix (NFLX) will stop using Akamai (AKAM) to support its streaming services, Seeking Alpha reported. Instead, Netflix plans to utilize the CDN services of Limelight Networks (LLNW) and Level 3 (LVLT) to support all of its streaming, the website said. Netflix is denying the story, according to Cnet, but Akamai was still losing 5.23% to $51.30, while Limelight surged 23.33% to $8.14 and Level Three climbed 14.12% to $1.01... American Public Education (APEI) jumped 21.25% to $32.82 after reporting stronger than expected Q4 results. :theflyonthewall.com

11:48 EDT LVLT

theflyonthewall.com: Netflix says Akamai remains a vendor, reports not accurate, Cnet reports

 

http://www.theflyonthewall.com/permalinks/entry.php/LVLTid1328956/LVLT-Level--halted-due-to-circuit-breaker-rules

 

 

 

         

 

 

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Guest ValueCarl

Coal you ask? It was one of a few  Kiewit Diversified Group assets(D shares), which in Walter Scott's wisdom, were spun off to create LVLT at its origin, while "protecting the downside" with cash producing vehicles during the build out phases. Including reclamation costs, I've heard value numbers in the "earlier years," much prior to the energy boom, in the range of $100-150MM. Coal continues to produce consistent, albeit, relatively small ebitda over the years as part of their "other revenue" category.

 

Other D share spin offs at the time included CTCO, or Commonwealth Telephone, one that Gabelli had his paws on, in addition to RCNC, and an Orange County, California Toll Road, Highway 91, I recall. They performed some "financial covenant" magic with certain "software" assets over the years too, including "Software Spectrum" and "Corporate Software" both part of the their information technology businesses.

 

One asset which garners little attention on their balance sheet today, is the "wireless spectrum" that they hold tied to their "Telcove" acquisition a few years ago. imo         

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Carl, I have involved in 4 different video startups in my career, two of which I was co-founders.  I am about to be involved with another video startup, and I can tell you that 60% of the IP trafffic generated on the net today are video related.  Nine years ago, AKAM tried to recruit me, and I said "no".  I didn't think they had a good technology platform for video(THE BIGGEST HOGGER of bandwidth), and I still don't.  What they are really good at is DSA. 

 

I am amazed by the pump jobs that guys like GIGAOM, Cramer, FOOL.BOMB and other dubious sites are doing with AKAM.  They can have a ton of servers farm to accelerate videos all the want, but when it comes to HD videos, not owning the pipes and the fiber is a big shortcoming. 

 

The last two announcements related to CDN that we have seen LVLT made with DIS and NFLX have shown the value proposition of owning the fiber networks.  This is quite a coupe for LVLT.  My bet is that NFLX is leveraging LLNW for their acceleration and uses LVLT for their fiber. 

 

A few more good news like this or a good deal with TWC, and LVLT's business model will take shape...

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And the idiotic forum that is FOOL.BOMB continues on...

 

http://www.fool.com/investing/general/2010/11/09/netflix-lifts-limelight-networks-what-you-need-to-.aspx

 

"$10 million to $15 million Rayburn estimates is at stake is barely more than a rounding error for Akamai, which is on track to generate more than $1 billion in 2010 revenue."

 

These guys at FOOL actually would believe that (3) would invest $24MIL in CapEx to just capture only $10mil to $15mil in revenue that is split btw LLNW and (3).  If they think that, they are a lot dumber than I thought...

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Guest ValueCarl

brker_ guy, thanks for sharing great information tied to your personal work and experience. Would dynamic site acceleration(dsa) be considered part of the "value added" services Akamai officials wax on about during their conference calls, or are there more bells and whistles of great "value" beyond this in their portfolio compared to a cdn operator, like (3)? 

 

I just got hold of today's bogus trades at 1:35-1:40 P.M. EST. Who is going to make certain these regulators find out who benefited from these trades and BUST THEM(427,682 shares)?

 

 

11/09/10 01:40 PM 1.1000 1.1000 0.8600 0.8600 348,395 0.9426 0.9895 0.9426 0.9895 0.8130

11/09/10 01:39 PM 0.9459 0.9908 0.9459 0.9908 0.8025

11/09/10 01:38 PM 0.9525 0.9929 0.9525 0.9929 0.8062

11/09/10 01:37 PM 0.9623 0.9957 0.9623 0.9957 0.8271

11/09/10 01:36 PM 0.9755 0.9993 0.9755 0.9993 0.8692

11/09/10 01:35 PM 1.0900 1.1000 0.4900 0.4900 79,287 0.9923 1.0037 0.9923 1.0037 0.9370

 

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AKAM has done a really good PR job of their DSA services, but it's nothing more than a "value added" services that AKAM wax on to their traditional services: caching.  To borrow some presidential-inspired candidate's words, "lipsticks on a pig"?  ;D  With real-time streaming, users won't tolerate 1-2 minutes of buffering.  I think this might have been the culprit to AKAM's downfall from the NFLX relationships.  I believe that in the last 6 months, NFLX got a lot of complaints about latency and high buffering time of their services.  So, they got fed up wtih AKAM and moved onto a different vendor. 

 

Of course, the MIT-graduated geniuses of AKAM won't admit as such because that would punch a hole into their little bubble.  Now, here is the thing.  With all of these smart phones accessing live streaming contents everyday, the huge demand on low latency goes up.  So, all of those good news we have been hearing about during (3)'s earnings calls on their growth on fiber to the towers, that will be another huge advantage that AKAM can't touch.

 

Six months ago, AKAM stole NFLX from (3) based on price; let's see what they will do for an encore.  :)

 

BTW: Don't know if you saw this before, but it's an interesting reading on how warped the FCC really is:

 

https://prodnet.www.neca.org/publicationsdocs/wwpdf/42610att.pdf

 

Thanks for sharing on the sham trades.  I sure hope someone at the SEC takes a look at something like that...  It's a stinking shame!

 

 

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Guest ValueCarl

Yes, I came across this article this morning as their PR machine kicks into high gear with emphasis on growth and their formerly nebulous-to me at least-"value added" spiel. They are keenly aware that, if they don't say the word "growth," sharks will smell their blood and consume their carcass for din din.   

 

If one focuses on their "mobile maneuvers" to catch this next wave or shift, while paying careful attention to Crowe, the Rensselaer Polytechnic engineer, as well as Quigley's comments from way down under-the video I passed the other day-they will realize the IMPORTANCE of owned "FIBER" in their internet diets tied to "mobile" as well!  ;D

 

I see certain players x various venues are willing to dismiss yesterday's shenanigans as "honest error." I remain skeptical!

 

Lastly, (3)'s COO, Jeff Storey, made some interesting comments at the Well Fargo Tech Conference in N.Y.C. yesterday. More consolidation will occur, and more "SHIFT" will inure to "the network partner you can rely on!"  ;D

 

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=553210

 

<Delivering and securing mobile video is a big opportunity for Akamai. Research firm eMarketer says 21.5% of mobile phone users will view video by 2014, up from 7.7% in 2009. Velocitude gives Akamai technology to optimize Web pages — making sure they display correctly — over wireless networks for different kinds of devices, Kenny says.

 

On its Oct. 27 earnings call with analysts, Akamai said it's looking to strike partnerships with more wireless network operators. Verizon Wireless is already one of its customers. But Limelight, too, is targeting the mobile space through its purchase last year of startup Kiptronic.>   

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I am glad to see that AKAM is seeing the light(pun intended) of mobile growth and mobile video users growth.

Thanks for sharing that article.  I smell the AKAM fish all over that article that you posted.  That AKAM margins are going to get squeezed as we move ahead.

 

BTW: Did you see Dan Rayburn's follow up story?

 

http://blog.streamingmedia.com/the_business_of_online_vi/2010/11/update-on-my-netflix-and-akamai-story-with-comments-from-both-companies.html

 

"Technical folks inside Netflix have been telling me that in head-to-head tests between Akamai, Limelight and Level 3, Akamai has not always performed well. They have not always been the worst, but they have not always been the best. They have also told me that they have seen performance issues on Akamai's network, specific to video."

 

Now, just imagine that AKAM is trying to do that over wireless without owning fiber to the towers?  Good luck with that!  Accelerating websites and data are one thing, but when it comes down to videos, that is a lot of IP traffic they will be pushing to the handsets.

 

 

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Guest ValueCarl

brker_guy, you are enlightening and stimulating my brain cells this morning! At the same time, I am excited to see what the Watsa crew did or didn't do with their position this Q!

 

Two things. Here's Dan's update from (3) confirming multi year contract win.

 

Level 3 Now Confirms It Has Secured A "Multi-Year CDN Agreement" With Netflix

 

Dan Rayburn | Tuesday November 9, 2010 | 06:58 PM | Comments (2)

 

You'll hear more about in the coming days, but Level 3 has now gone on record with me and other news outlets to say that they, "have secured a multi year CDN agreement with Netflix." They also go on to state that, "the capex mentioned on our earnings call associated with a large customer is for Netflix and the large customer is Netflix."

 

http://blog.streamingmedia.com/the_business_of_online_vi/2010/11/level-3-now-confirms-it-has-secured-a-multi-year-cdn-agreement-with-netflix.html

 

 

And, here's a Lazard guy yapping along on NBC's "Fast Money" degenerate gambler program, regarding the "short nature" of such contract wins and losses. I recommend he revise his spread sheet on "contract times" notwithstanding the fact that, he implies tough sledding ahead for AKAMAI, one with an Astronomer's descendant spearheading its operations today.

 

Look to the sky, the moon and the stars for your answers! ;D

 

http://www.cnbc.com/id/15840232/?video=1638544355&play=1

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Carl, have you seen the 13F of Fairfax already?  I have been monitoring, but I have not seen anything over at the SEC or LVLT's site regarding Fairfax filings this Q.

 

To be frank, ever since that stupid show Fast Money has been on TV, I never watched more than 5 minutes of it.  To me, it's Cramer multiply by 4 of his clones yapping away at nothing.  Whenever I watch CNBC, I turn on "Mute", except for when Warren is on. :-)  Note one of them said, "We here at Fast Money has been plugging Akamai"  Really?  Could have fooled me!  ;D  Now, they are all worried about this deal and the implications on AKAM.

 

The only two things that Lazard made any sense at all are 1) the frequency of churns in CDN space (This is very true - more on this in a bit) and 2) video transmission is a little bit different than websites in that the content are centrally generated and distributed(This is an edge that LVLT has that AKAM and LLNW don't have).  As we generate more HD contents which are on average 5GB in size, the fiber backbone and network will have a huge advantage over servers farms.  A 20Mbps HD stream is going to eat up A LOT of BW.  People haven't seen anything yet.  Wait til when Google unleash its cloud computing platform on us minions.  GoogleTV is just the start of it.

 

Now, here is the thing that really puzzles me.  What I don't understand is why would LVLT management muted about this during the earnings CC and then it took the press to pry it out of them?  This is a "Multi-Year CDN Agreement".  That is huge!  Do they have a plan somewhere to systematically squeeze the shorts until they die off?  I just don't understand their thinking on this ever since the CC, followed by the DIS PR and now this.

 

We need to have LVLT hire the QCOM's PR team over there.  Those guys are masters of the universe when it comes to PR campaign. :-)

 

 

 

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Guest ValueCarl

I am with you on this.

 

<I have been monitoring, but I have not seen anything over at the SEC or LVLT's site regarding Fairfax filings this Q.>

 

There are so many why "not's" to (3), that I have stopped counting! Often times, I have felt like the CIA is running the factory. It's a good thing to have that Admiral on deck with his defense industry spheres of influence, however.  

 

How about this why not for starters? Why not shut the network down from all the "FREE LOADERS," based upon the premise that if you don't shut it down in favor of a fair price for bit traffic

"freight," there will no longer be a network to serve the people valuable services? At a minimum, it would be a good test to show the world how important (3)'s backbone is. Greater than that, it may stimulate rapid change over that archaic regulatory "compensation" scheme which hasn't adapted correctly for internet related traffic tied to "cost" yet!    

 

Do you know how much lease space AKAM has with (3) specifically, and how much time might be left on (3) based facilities their servers are domiciled in?      

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"Why not shut the network down from all the "FREE LOADERS," based upon the premise that if you don't shut it down in favor of a fair price for bit traffic "freight," there will no longer be a network to serve the people valuable services?" 

 

A few years ago, I think (3) went through that exercise with those "FREE LOADERS" at CCOI, but then they backed down.  I was mortified!  If they really wanted to kill off a leechy free loading competitor, CCOI was the perfect target.  You are right.  Sometimes, I am wondering the same thing as you are about them being run by the CIA because we hear very little of the Federal contract awards that they have won.  Yet, they claimed 11% growth in that business last Q.  I didn't see any PR on it other than the patch job for the SSA contract. 

 

"Do you know how much lease space AKAM has with (3) specifically, and how much time might be left on (3) based facilities their servers are domiciled in?" 

 

This, I don't know because I don't have any insights to (3) or AKAM.  I have been to a quite few (3) co-location centers in CA, and I am amazed at their floor space.  I think that was the first time I thought about investing in them.  I actually met Walter Scott Jr. a few times in Omaha at Borsheims before.  Warren knows how to pick his friends.  Mr. Scott is an exceptionally sharp businessman.

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Guest ValueCarl

Their largest institutional owner, SEAM, still hasn't reported officially to their owners nor filed visibly with the SEC tied to (3) yet either. Vanguard upped their stake in the Q, however.

 

Owner Name

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

(Shares) % Change

(Shares) Value

($1000)

SOUTHEASTERN ASSET M... 6/30/2010 484,231,646 22,434,190 4.86% $508,443

 

FAIRFAX FINANCIAL HO... 6/30/2010 139,276,421 0 0.00% $146,240

 

THORNBURG INVESTMENT... 6/30/2010 64,169,670 1,300,767 2.07% $67,378

 

VANGUARD GROUP INC 9/30/2010 62,446,351 1,455,581 2.39% $65,569

 

LMM LLC /MD/ 6/30/2010 53,758,302 0 0.00% $56,446

 

The history of the railroads has always intrigued me with this name as well. If the sign of the times doesn't bring us a "corner" like the world hasn't seen in more than one hundred years, while excluding Volkswagen in 2008, it will be a lost opportunity by these business geniuses.

 

I hope Mr. Scott enjoys financial history as much as his close, personal friend, and partner, Mr. Buffett does. Importantly, I hope that you're right, as respects a "plan" to deal appropriately with this SILLY QUOTE MACHINE run by Mr. Manipulator.  

 

That would be poetic justice for Bill Miller's risk models causing him to throw in the towel recently on approximately 54MM shares.  

 

<Do they have a plan somewhere to systematically squeeze the shorts until they die off?>

 

 

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I guess we just have to wait til November 15th to find out more details from the big 5 holders.

 

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

 

This is no knock on Bill Miller because I admire him and the streak greatly.  His streak reminded me of Cal Ripken's streak.  So, it's quite legendary, but having studied him the past couple of years, i just don't understand his "risk models".  I remember a few years ago, I followed this risk models that he has and followed along with him right into SYNM like a lemming.  I barely got my money back from that investment bc SYNM nearly went belly up.  After that disaster along with the his bad timing calls on the financials which drove one his funds to be down 60%, I haven't followed him much.

 

So, if your data are right about him bailing on (3), but (3) manages to turn around its ship, it would be another bad call for Mr. Miller.

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Guest ValueCarl

You are skilled at cutting your losses even in a bad situation.  ;)

 

<I barely got my money back from that investment bc SYNM nearly went belly up>  

 

He seems to be fully gone inside "The Opportunity Trust." On the other hand, he maintains his stake in Sprint/Nextel, one who has taken a licking thus far this quarter(approx.11 percent). As you know, that's the 54 percent control stake owner of Clearwire(CLWR), a 4G Wimax entity whose ability to access future capital to "grow" is being questioned, yet one who outsources their terrestrial fiber needs to the (3) network.  

 

I agree with him that more "consolidation" is necessary in the space, and Jeff Storey indicated the same openness to that yesterday including no difficulty getting financing from (3)'s financiers assuming reasonable terms by reasonable minds can come together. That hasn't been the case for a long time now, so that, typically these things won't happen until more draconian situations, especially ones in distress begins to take hold.

 

Who knows? Although CSCO's numbers appeared superficially great after market, their guidance surrounding current/forward conditions, may or may not be pointing towards some telecom stress, at least for larger incumbents with traditionally great market share, like, let's say, Sprint's, "I can hear a pin drop," legacy long distance network?    

 

 

Top detractors

Telecommunication and information services provider Level 3

Communications slid during the quarter after the company's

second-quarter earnings announcement, which revealed that

weakness in the company's core network services division

outweighed positive EBITDA figures. Overall, we like the

secular drivers around data delivery infrastructure and the

industry's need for consolidation. However, the company's

poor 2010 performance followed management's February

extension (the third in 10 years) for the time it would take for

Level 3 to become sustainably free cash flow positive, all of

which led us to exit the position.

 

 

http://www.leggmason.com/individualinvestors/documents/commentary/D8503-LM_CM_Opportunity_Trust_Commentary.pdf

 

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