Another interesting interpretation/update:
_______________
Global Crossing (GBLX) 41 11/32 +29/32 : The "out-of-nowhere" telecommunications company that didn't even exist two years ago. Spawned from a unique deal between Gary Winnick, a financier who started at Drexel Burnham Lambert with Michael Milken, and AT&T, Global Crossing was the first company to build a transatlantic fiber cable without any guaranteed revenue from customers. The cost of building a transatlantic cable is so high, between $700 million and $1 billion, that large companies will not do it without preselling revenue. Global Crossing did it, and as banker Dean Kehler, of Canadian Imperial Bank of Commerce, an initial funder, put it in the April 19 Forbes magazine "This was a project with one risk. If they built it, would customers come?" The answer has been yes, and today's announcement by Global Crossing that Q2 revenues will exceed analysts expectations, shows that the demand for bandwidth is higher than anyone expected. Global Crossing has boomed as a management team with extremely fast execution, and a penchant for deal making has made them a real player in the telecommunications world. Global Crossing's deals to acquire US West (USW) and Frontier (FRO) seem about to be derailed by Qwest (QWST), but today's numbers show that real growth is in bandwidth associated with IP-based fiber networks. Global Crossing now appears to be at a crossroads of its own: either specialize in building as big a fiber all-IP network as possible, with a goal of being acquired by a larger telecom company eventually, or become that larger telecom company themselves by acquiring other existing phone companies. The company was on the second path, but Qwest seems determined to stop that from happening. A shift to the first strategy would seem to make a lot of sense, and the company's decision to build the Africa ONE system, a fiber network surrounding the entire African continent, seems to fit that direction. Global's stock is down over the past two months because of Qwest's thwarting efforts to take Frontier and US West away. But maybe it won't be so bad for Global Crossing in the long run. Sticking to the knitting of IP-based fiber may turn out to be the best thing for GBLX. - RVG |
