Took time off from summer vacation just to listen to the call, anyway, here's what I heard from the conference call:
1. Capacity sales forecast increased, while carrier data sales decreased. Large carriers still buying long term capacity while data services down due to economy. Casey expecting the slow down in data to be temporary, and Q4 should see recovery.
2. Sub-sea Atlantic pricing generally not declining as fast as before. GX selling a "customized" mix bag of services so pricing varies. Those Atlantic assets of 360 and the "Club" may be expensive to revive, lit, and maintain, uncertain as to who will buy them or what would happen to them. So, Casey expects Atlantic capacity to be reduced.
3. Casey not seen any shift from IRU to lease (remember this controvesy re: First Boston?) Large carriers still need the stability of IRU leases.
4. Still fully funded. At end of Q2, has $2B cash, $1.7B revolving credit, and $3B total cash revenue expected second half of year, will fund the $4.5B capex (max) this year. Coors couldn't say exactly how much lower than $4.5 guidance, however, GX has lowered spending by more efficient use of networks, lower pricing from vendors, and using inventory. In Y02, no more network construction needed, and Coors expecting GX still to be cash flow positive by late Y02.
5. Exodus - even if it were to have new owner, GX is assured service for 2 years. Also, Exodus has "preferred" pricing and quite likely new owner will want to maintain the current contract. Casey said GX clearly needs a "hosting" facility, in any case, he thinks EXDS will will come out OK, although he can't give details cause he is a board member.
6. Coors mentioned that GAAP breakeven should be on track for Y02.
7. Casey & Coors said that there is NO SWAPS of capacity with other carriers. The assets GX buys from other carriers COME FROM THE CAPEX BUDGET. There seems to be a rumor/misunderstanding that there is some hanky panky here, and mgmt said clearly, no hanky panky! Cash paid and cash received when assets are purchased or sold. Assets puchased by GX are part of capex budget.
8. The job cuts and reduction of operating expenses will make GX more internally efficient.
9. Even with reduced forecasts, over 20% growth. GX still taking market share away from others. GX growth still higher than competitors, despite difficult economy. GX still has "unique class of assets to carrier and enterprise customers" |
