Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: kellygreen who wrote (9925)	2/16/2001 11:00:26 AM
From: jopawa	Respond to of 15615

First Union Securities Inc. 02/16/01 06:45 AM Global Crossing, Ltd. (GX-NYSE) Earnings Reported Reports Q4 2000 Results--Reiterates Outlook for 2001 Maintain Strong Buy Rating: 1 Price: $18.90 52-Wk. Rng.: $62-11 Shares Out.: (MM) 885.6 Market Cap.: (MM) 16,738.8 Key Points • Q4 2000 cash revenue increased to $1,540, ahead of our $1,515 million projection. • IRU sales accounted for higher percentage of Q4 cash revenue due to new portions of network entering service. • Wholesale carrier revenue increased relative to commercial sales as company shifts focus toward carrier and large enterprise customers. • Swift and CSC agreements expected to contribute to commercial business and leverage global network. • We are leaving our 2001 cash revenue estimate of $6.98 billion unchanged at this time. • Our 12 month price target of $46 is based on our DCF model using a 13.5% discount rate, 11x terminal multiple, and a 25% public market discount. Company Description Global Crossing is an international broadband carrier offering a variety of telecommunication services over its global fiber optic network. Discussion Q4 2000 cash revenue increased to $1,540 million from $1,078 million in Q4 1999. Global Crossing reported Q4 2000 revenue above our projections, with cash revenue of $1,540 million versus our $1,515 million projection, and GAAP revenue of $997 million was weaker than expected due to weakness in commercial service revenue. Adjusted EBITDA was $418 million versus our $386 million estimate, and GAAP EBITDA was ($148) million versus our ($133) million estimate. Reported EPS of ($0.70) was ahead of our ($0.83) estimate. Global Crossing remains well financed, ending the year with approximately $1.3 billion in available financing and approximately $1.5 billion in cash. Telecom capex in Q4 of $1.7 billion was well ahead of our $1.1 billion estimate. IRU sales accounted for a higher percentage of Q4 cash revenue due to new portions of network entering service. IRU sales accounted for 38% of cash revenue in Q4 2000, up from approximately 33% of cash revenue in previous quarters. Management indicated that sales on newly commissioned network routes in Latin America and Asia accounted for the higher percentage, and that IRUs as a percentage of cash revenue is expected to decline to approximately 20-25% of cash revenue in 2001. In addition, trans-Atlantic IRU sales are expected to decline from less than 5.5% of cash revenue to less than 2% in 2001. We would view a decline in the mix of IRU sales as positive because it would mean a higher percentage of service revenue, which is a more predictable revenue stream. Wholesale carrier revenue increased relative to commercial sales. Wholesale revenue increased as the company shifts its focus to carrier customers and large enterprise customers, and carrier service revenue was $372 million, up from $270 million in Q4 1999 on a proforma basis, a 38% increase. Commercial revenue increased to $395 million from $385 million in Q4 1999 on a proforma basis, only a 3% increase. However, we note some customers are likely waiting for the introduction of IPC™s (IPC was acquired by Global Crossing in Q2 2000) next generation IP turret, which we expect to be introduced in H1 2001. Swift and CSC agreements expected to contribute to commercial business. These relationships create an indirect sales channel for Global Crossing™s services, as the company continues to add network routes and expand its product offering. This eases our initial concern about a trend away from commercial services, as we believe a broad commercial customer base provides a more stable revenue source and better margins in the long term. Global Crossing expects its next generation VoIP and VPN products to provide incremental growth and improve margins, and the company continues to add capacity to both its long-haul and metro networks. We are encouraged by Global Crossing™s efforts to offer new products and believe its global network is attractive to a certain class of customer, making Global Crossing a competitor in virtually all bids for global network services contracts. We are leaving our 2001 estimates unchanged at this time. Our 2001 cash revenue estimate is $6.98 billion with a commercial, consumer, carrier revenue split of 30%, 2%, and 68%, respectively. This implies revenue growth rates of 34% for commercial, -17% for consumer, and 52% for carrier business on a proforma basis. We expect to refine our estimates pending the March 1 investor conference. Additional information available upon request.

To: kellygreen who wrote (9925)	2/17/2001 2:08:47 AM
From: TechMkt	Read Replies (1) \| Respond to of 15615

Network Infrastructure Global Crossing plans VoIP service launch for March By Simon Marshall, Total Telecom 16 February 2001 Global Crossing has finished phase one of its migration to a global VoIP network, and barring any adverse results from tests it collated Friday, will launch wholesale services on 1 March. The completion of phase one means about 65% of its targeted U.S. TDM traffic has been channeled on to its VoIP backbone, and the next stage will be to deploy Sonus Networks' media gateways in an additional 36 global locations by the end of 2001. The next one will be a node in Hong Kong, scheduled for completion during the first week in May, bringing the total of launched VoIP gateways to 24 worldwide, with 15 operational in the U.S., seven in Europe and one in Japan. Longer term, however, Global Crossing will set its sights on being a key 3G backbone provider. "We will be offering basic VoIP transport to [fixed-line] carriers, which is bread-and-butter revenue for Global Crossing," its director of new initiatives Andy Rawnsley told Total Telecom. "But we're also positioning ourselves to be a provider of [VoIP] capacity between 3G networks," he said. "We'll also be ideally placed to serve ASPs and ISPs through peering over an H.323 or SIP interface to hand-off traffic to our IP network, and we'll look to do that globally, probably by Q1 2002," he added. Although Rawnsley said Global Crossing wouldn't achieve any great operational cost savings by migrating to VoIP in terms of bandwidth costs, he said the Bermuda-based company would stick in the meantime to ATM as its chief quality-of-service (QoS) mechanism. Conventional wisdom has it Multi-Protocol Label Switching (MPLS) and other traffic engineering standards will manage QoS in IP networks, and not ATM. "We're breaking the model slightly," he said, "because [although] there are savings to be made in bandwidth utilization, there are also QoS penalties to be paid with MPLS." "We've chosen to put bucket loads of bandwidth between our network elements [to guarantee QoS], because I don't personally believe these techniques are mature enough to commit our customers' traffic to," he said.