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Technology Stocks : Broadwing Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Area51 who wrote (3222)	5/2/2006 6:52:22 PM
From: bob zagorin	Read Replies (1) \| Respond to of 4245

thanks for the link. i'll repost here for reference.. i generally agree except that it is undervalue by 50% or more as an asset in a sector that is coming back to life... Thos. Weisel "...<Executive Summary --The numbers and metrics: Broadwing reported 1Q results that were in line with our estimates. In addition, the company generated positive adjusted EBIDTA for the first time. Revenue of $224.0mn was in line with our $224.3mn estimate. Adjusted EBITDA of $2.3mn (excludes $2.6mn of restructuring and other charges) was also in line with our $2.4mn estimate. The company also made the final $32.6mn payment on its senior convertible notes and raised net proceeds of $104mn through two private placements. These transactions solidify Broadwing¡¦s balance sheet as one of the strongest in the telecom sector. -- Our thesis: Broadwing is currently still suffering from some of the same industry trends that have hindered its IXC counterparts. On the call, management noted that the company is still seeing pricing pressure on enterprise voice, but that demand for higher-speed data service is picking up. In our view, Broadwing needs to continue to lower its access costs, either operationally or through acquisitions, as it works toward stable EBITDA margins. -- Model adjustments: Based on this quarter¡s results and general IXC industry trends, we are revising our 2006 revenue estimate for Broadwing to $919.5mn from $919.8mn and keeping our EBITDA estimate at $21.7mn. We are also adjusting our 2007 revenue and EBITDA estimates to $955.8mn and $39.8mn from $955.4mn and $39.3mn, respectively. -- Valuation: BWNG is currently trading at 1.1x 2006E TEV/revenue versus 2.1x and 3.7x for LVLT and TWTC, respectively. We believe that the stock is fairly valued given that BWNG is focused on high-quality enterprise customers and is one of the few remaining independent IXCs; however, the company operates in a very competitive industry and still needs to show consistent EBITDA growth>>