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

To: flint who wrote (3071)	9/9/2001 10:57:34 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 3873

>>The problem with LVLT is not so much its ability to turn cash flow positive prior to running out of cash. Its the fact that $8 billion in bonds will be due in a small window of time in the mist of a credit crunch. I do not care if LVLT is even profitable by 2006. $8 billion is a lot of debt to restructure without dilution.<< It's only a problem from here if the market price of the stock is assuming that things are so good that a dilution is very unlikely. I think a reasonable case can be made that the stock is currently discounting bankruptcy as a high probability event. The typical article on the company's finances has been somewhere between bearishly spun and fictional. I do not expect the company to move towards a dilution at this time. As a shareholder I am not anxious for them to rush into it yet either. Even under some fairly poor assumptions about the operations going forward the company has a lot of time. In addition to its cash balances, control over the majority of cap ex. after 2001 etc..., it has about $700 million (perhaps more) of non-core assets that can be monetized to pay down bank debt and relieve some of the pressure. I believe most of the shareholders want to give the business model and assets some time before throwing in the towel. A majority of the network was only lit a few months ago and the late stage build out is still in progress. For those of us that believe that LVLT has the correct long term approach in being horizontal, owning substantially all of its network, designing uniformly across the entire map (including metro), being the most cost efficent and easiest to upgrade etc... we simply cannot tell yet whether some substantial business wins can occur over the next few quarters. Something like that COULD NOT have occurred yet under any scenario. LVLT is just starting. Most importantly, I think news of a partial dilution or some kind of reorg related to a Kiewit cash infusion or bond holding would cause a 25% pop in the stock in one day because so much worse is expected. A dilution would scare the shorts who think the company is done for because it would raise the probability of survival. LVLT has some clear problems and issues. I would even go as far as saying some of the bulls and longer term share holders were in denial over the last 6 months or so as the short term fundamentals deteriorated and the stock headed south. Perhaps some put a little too much faith in Crowe's various views and business forecasts too. But the fact of the matter remains that Crowe has been more right than anyone else about many of long term industry developments. He simply got the bubble and its (bursting) impact on LVLT wrong. As far I am concerned LVLT still has the best assets and long term business plan. The company is trying to navigate a business hurricane for long enough to prove those assets and business model.