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

To: Freedom Fighter who wrote (3103)	10/8/2001 9:03:03 AM
From: el paradisio	Read Replies (1) \| Respond to of 3873

Wayne, here is the recent deal with Calpoint: By Jeff Smith, News Staff Writer Call it the intriguing telecommunications deal of the week, involving Denver-area rivals and a little-known startup called Calpoint LLC. The complicated deal, which raised analyst eyebrows last week, works this way: Calpoint will buy fiber from Broomfield-based Level 3 Communications, "light it" largely with $300 million of communications equipment bought from Qwest, then sell a new optical wavelength product back to Qwest for $600 million over five years. In turn, Qwest will resell the wavelength product to big customers. Analysts initially were concerned that Qwest would try to book the revenues up front and perhaps twice. Qwest Chief Executive Joe Nacchio assured analysts this week that Qwest will record the net gain of the transaction over five years, expected to be about $250 million in present dollars. But the transaction also has become intriguing because it involves two bitter, fiber-optic network rivals -- Qwest and Level 3. Level 3 Chairman James Crowe resigned from Qwest's board in 1997 and soon after started Level 3. Nacchio was asked this week by Goldman Sachs analyst Frank Governali why Calpoint is buying the fiber from Level 3. "Beats me," Nacchio said. "We don't sell national fiber to anybody. I assume they can get it from Level 3 and couldn't get it from anybody else." Level 3 wouldn't comment Thursday on the transaction. Qwest also has been asked if it has an affiliation with Calpoint, a company founded by the principals of mysmart.com, a California-based Internet company that helps users navigate the Web. Qwest made a $5 million equity investment in mysmart.com. "There was a rumor . . . that one of our principal shareholders was invested in (Calpoint)," Nacchio said. "Not true." Nacchio said Qwest is outsourcing the wavelength engineering work to Calpoint because it believes it will be able to bring the product to market six months faster this way. Nacchio said Qwest began negotiations on the deal last March. On Thursday, little still was known about Calpoint except the connections with mysmart.com. Calpoint didn't register as a company in California, Colorado and other states until July and August, according to state records, and although it has a Los Angeles address, it has no published telephone number or Web address. "They're just starting out," Qwest spokesman Tyler Gronbach said Thursday. "The principals are in the process of identifying office space and hiring people." Gronbach said the principals are veterans of the information technology and telecom business. October 5, 2001