(LVLT) - Level 3 Communications Message Board

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Technology Stocks : (LVLT) - Level 3 Communications

LVLT 53.63

0.0%

Nov 1 5:00 PM EST

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To: Freedom Fighter who wrote (3047)	8/8/2001 9:47:36 PM
From: flint	Read Replies (1) of 3873

"However, "IF" there is a shortfall, I expect it will be met via a dilution of some kind and not a bankruptcy. " LVLT debt is about 5.3 times the market cap. If there is dilution lets deal with reality no more than $500 million in debt will be diluted away. This notion that bonds are trading at $.50 on the dollar will not cut it. The moment LVLT starts buying bonds on the open market the bonds will be trading at $.80 on the dollar. "The main point of misunderstanding is that a revenue shortfall does NOT automatically translate into a funding problem. The network will essentially be built by yearend (all major Cap Ex.). A significant portion of the CAP EX going forward is "success based". " Back when LVLT was building the network its loses were about $1.25 per share. now with the network built its about $7.25 per lose. The cost of operations is the great expense - not the build out. "So if there is a revenue shortfall, it will mostly be offset by a reduction in the Cap Ex level that would have been necessary to support the higher revenues, but that won't be needed with lower revenues. " The more line lit-up the more money LVLT loses in the short run. Whether 2 customers or 200 hundred customer are on a line the cost of operations are about the same. The only way to slow earnings loses is to slow the lighting of a line - possibly European lines. This however is clearly a defensive strategy in which LVLT is hoping to wait out the credit crunch. I for one am all for LVLT liquidating their costly European operations and using that cash to shore up debt. Last I heard they have refused to do that. I close my position at $4.10 today. When it hits $5.00 again I'll be back.

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