To: Raymond Duray who wrote (3115 ) 3/16/2002 2:18:31 AM From: Rich Wolf Read Replies (2) | Respond to Quite true re margins... LVLT CEO Crowe has built into his 'model' a continually decreasing revenue per bit. The question is whether overall revenues can grow fast enough to get to cash-flow positive, so a company like theirs (which a company like JNPR is joined at the hip with, truth be told, since LVLT is the only player currently fully committed to an all-IP network for both voice and data) can 'handle' their debt. Other carriers are flushing through BK ... LVLT still hopes to thread the eye of the needle ... I have my doubts, but they have more than a year before they run into issues regarding the covenants on their loans and are sitting on a hoard of cash and semi-liquid assets that may be worth $1.5B vs total debt of $5.2B plus $1.125B revolver drawn down (the one with the covenant issues, which they dodged by 'buying' almost $1B per year of revs which have really little profit, LOL) ... so I think their scenario is that the economy recovers, their stock recovers, and they double the shares to raise cash to handle the debt ... dilution rather than destruction of equity.
