Level 3 cut to market perform
NEW YORK, June 19 (Reuters) - Deutsche Banc Alex Brown said on Tuesday it downgraded Level 3 Communications Inc. (NasdaqNM:LVLT - news) to market perform from buy.
Level 3 on Monday cut its growth outlook through 2002 and said it would cut about 1,400 jobs, or 24 percent of its work force. DBAB said the company faces ``significant challenges in meeting its lowered targets.''
The firm also said that until there is greater visibility into the company's business transition, Level 3's financing situation will be in question. Level 3 changed its strategy to focus on large, established companies, rather than early-stage firms with limited funding.
``We believe the company will face significant challenges executing its revised business plan. The company must convince its new customer base that it is a viable alternative to other established players,'' DBAB said in a research report.
Other hurdles include sales force realignment, longer sales cycle and employee morale issues. The weak economy will compound these issues, DBAB said.
``We believe investors have to realize that the company is attempting to take action in order to avert sure disaster, unlike many other companies which ignored the warning signs and filed Chapter 11,'' DBAB said.
``We believe that if the plan is to demonstrate success, it must occur within two quarters,'' the firm said.
Shares of Level 3 fell 63 cents, or more than 10 percent, to $5.34 in morning trading on Nasdaq. |
