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

To: tech101 who wrote (32)	7/13/2007 3:25:49 PM
From: tech101	Read Replies (3) \| Respond to of 70

ragingbull.quote.com Mozoz-- FYI out this a.m on GLBC From Jefferies: ______________________________________________________________ Reiterating Buy rating on the heels of a 11% selloff in the stock. Key Points • Selloff Is Overdone. We believe that the selloff of GLBC over the last week has been overdone and believe at current levels the stock is attractive. • Expect Margins to Improve in 2Q & 3Q. We expect to see margin improvement in 2Q07 and 3Q07 driven by i) a historical downtick in expenses from 1Q to 2Q, ii) management's focus on cost control and iii) cost cutting activities during the quarters primarily in the SG&A line. • GLBC Results Should Achieve Our 2Q07 Expectations. We believe that GLBC should be able to achieve our 2Q07 expectations including revenues of $549.3 million and EBITDA before non-cash compensation of $18.1 million. • Jump in 3Q EBITDA Anticipated. We expect a significant increase in EBITDA between 2Q ($18.1 mm) and 3Q ($53.9mm) driven by: i) a full quarter of Impsat, ii) expanding gross margins, iii) improved pricing, iv) payroll reductions, v) cost of access initiatives and vi) reduced costs for third party maintenance and cost of equipment. • Pricing Stable. We believe that pricing for the industry has been stable and may be improving. This has been an issue for the industry and a rational pricing structure would help GLBC accelerate its EBITDA growth. Valuation/Risks Valuation Attractive. Although GLBC will have a slower ramp-up in EBITDA than we had initially expected, we still believe that the combined company (GLBC/Fibernet/Impsat) should exit FY07 at a $258 mm run rate, which implies an 8.2x EBITDA multiple or 4 turns less than its closest peer. Our FY08 EBITDA estimates implies a 6.9x EBITDA multiple, which is less than half the industry average. Finally, GLBC currently trades at 0.87x FY08E revenues, a discount to last year's Broadwing sale of 1.3x revenues. We reiterate our Buy rating and $30 price target. ____________________________________________________________________ The above probably accounts for the early strength (+ 6%. I would imagine that GLBC gets taken out at some point-- but I have been wrong about such matters before.