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Technology Stocks : (LVLT) - Level 3 Communications -- Ignore unavailable to you. Want to Upgrade?

To: N. David Lessani who wrote (2646)	11/14/2000 10:21:29 AM
From: Asymmetric	Read Replies (1) \| Respond to of 3873

Cash Burn Rate David, my understanding is that Level 3 is burning cash to the tune of $120 million per week. Since on average there are 13 wks per quarter, 13 X $120 mil is $1.56 Billion per quarter. If they were to continue to burn cash at this rate, that is $6.24 Billion in one year. That is why analysts are questioning whether the cash in the bank will see this company through past 2001. If anyone can confirm or correct my cash burn figure, I would be happy to see it. Level 3's, and telecomm industry rule of thumb is that the ratio of cost of electronics to light the fiber to the cost of putting in the fiber itself is somewhere between 15 and/or 20 to one...ie for each dollar spent on putting in the fiber, it'll cost at minimum $15 for the equipment to light it. I think my figures are low here. If this is indeed the case, then it is hard to see Level 3's cash burn decreasing, rather the higher probability is that it would increase as they go about lighting their network and adding staff to manage and maintain their network. I note that when James Crowe talks about his network being 96% completed, he is only referring to the fiber and conduit portion of the buildout...at least that is my understanding. $6 Billion is a hell of a lot of money...but the question remains, is it enough for what they are trying to do? I know senior management and the financial analysts are at odds on this issue, but right now, the bondholders are siding with the analysts. Level 3 convertible bonds are presently yielding over 16.5%. Regards, Peter.