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

To: crete who wrote (679)	4/2/1998 12:32:00 AM
From: Phil Jacobson	Read Replies (2) \| Respond to of 3873

Thanks to everyone for the very kind words, and yes, L3 is staying bookmarked! I'm sure I'll be back in soon, maybe even tomorrow, but it'll be with a lot fewer shares to start. Again, I'm just looking for some stability...today was wickedly volatile, and no, I didn't like the feeling that the parachute might not open at the end of the day. It did, and the price bottomed and held at higher than open. That's an excellent sign. Tomorrow will probably gap up or down, it's anybody's guess which way. I don't mind if I have to buy in at higher than where I sold - that's just the price of insurance. I do think we need a firmer footing via concrete deals and direction pretty soon to show the market how profits will be made. The Qwest model is unique and very good. They overbuilt the network and used fiber sales to other carriers to pay for construction. But it can't apply to L3 - they don't have the time to do that kind of construction. L3's first deal is to buy fiber from Frontier who got it from Qwest. That's a start, but it puts L3 in 3rd place in the profit chain right at the outset. There needs to either be a better model for future buildout or a different product/ customer set. Otherwise they could find themselves in much the same position that the long distance companies face in doing local service over the Bell networks if they try to make money with the same products as QWST and Frontier. Based on what I've read or heard, here's what I think L3's doing: I suspect L3 will continue to get their intercity network (not intracity) from QWST via Frontier, GTE, or from WCOM. Then they'll need to announce a service differentiator asap. My sense is the differentiators will be a product set rooted mostly in the CLEC arena, with IP based long distance and international carrier deals to provide low cost access to Europe and Asia/Pac to supplement the core local access offerings. Speed is critical as QWST is also doing international deals - but they're not doing local. Foreign companies will give up a lot for access to the US market as they are paying the proverbial arms and legs for international private lines from companies like MCI today. And this sets the stage for a possible merger with QWST in 2-3 years...that's why I keep hinting at it. The local loop aspect is very interesting, ie, Crowe re-building MFS with fiber rings around 60 cities. Sounds good, maybe that's what the cash is for. But this time there are others doing the same thing. It'll be harder to make a profit and pricing could become a problem. I don't think local can stand by itself like it did with MFS. So, let's see - we're using cash to build the local loops which become the mainstay of the business, create product differentiators for the local market customers utilizing functionality in the state-of-the-art QWST network that interconnects the local loops (it's secondary because it comes 2nd or 3rd hand), and get deals in place with international carriers to subsidize the cost of the network and get access to the rest of the world. For the interconnection between the cities stock deals could be done to conserve cash. The international deals are just a trade of access rights. Oh yeah, throw in a large Internet player. Anyone care to comment, maybe we can submit an SI business plan to Crowe! In all seriousness, we need a plan from L3 that lays it out in detail asap. BTW, after tomorrow I'll be on vacation in Europe for two weeks so har-dee-har-har will get free reign. Remember, his posts are a public service and are meant to amuse! He's our own version of the "duck and cover" tapes done by the US Gov't in case of nuclear war. See ya, Phil