QUOTE AND NEWS
Benzinga  Jul 15  Comment 
Benzinga recently had the chance to talk with independent analyst and 20-year market veteran Martin Pyykkonen about the swirl of recent M&A rumors surrounding Level 3 Communications, Inc. (NYSE: LVLT), Yahoo! Inc. (NASDAQ: YHOO) and Twitter Inc...
Benzinga  Jul 15  Comment 
Shares of Level 3 Communications, Inc. (NYSE: LVLT) surged this week after Benzinga Pro reported the company is consider strategic alternatives, including a potential sale of itself. The report has created a large amount of investor interest...
Benzinga  Jul 14  Comment 
The following are the M&A deals, rumors and chatter circulating on Wall Street for Wednesday July 13, 2016:   Level 3 Considering Strategic Alternatives The Rumor: Benzinga reported Wednesday that Level 3 Communications, Inc. (NYSE:...
Benzinga  Jul 13  Comment 
Shares of Level 3 Communications, Inc. (NYSE: LVLT) hit a new 52-week high of $57.59 and gained more than 4 percent on Wednesday after Benzinga Pro reported that an industry source said the company is exploring strategic alternatives, including a...
Benzinga  Jul 13  Comment 
Level 3 Communications, Inc. (NYSE: LVLT) shares are up 3.6 percent following a potential buyout by Comcast Corporation (NASDAQ: CMCSA). Stephens analyst Barry McCarver says a Comcast bid makes a lot of sense and could provide major upside for...
Benzinga  Jul 13  Comment 
  Imprivata Inc (NYSE: IMPR) surged 31.21 percent to $19.02. The volume of Imprivata shares traded was 8485 percent higher than normal. Imprivata reached a definitive deal to be bought by an affiliate of Thoma Bravo, LLC, a private equity...
Benzinga  Jul 13  Comment 
Benzinga Professional on Wednesday morning reported Level 3 Communications, Inc. (NYSE: LVLT) is reviewing strategic alternatives. Level 3 is considering a range of options from an outright sale of the company to a large buyback, Benzinga Pro...
Benzinga  Jul 5  Comment 
D.A. Davidson expects Level 3 Communications, Inc. (NYSE: LVLT) to report earnings above consensus when the company announces its second quarter results on July 27. Analyst James Moorman cut his second quarter EPS view to $0.47 from $0.51 to...




 


Level 3 Communications (NYSE: LVLT) is a provider of a range of integrated communications services including network and Internet services, colocation service, media services and voice services. Its operations are divided into communications and coal mining.[1] Its largest segment, communications, consists of Core Network Services, Wholesale Voice Services, and Other Communications Services.[2] Its operations are primarily located in North America and Europe. As the demand for online video, gaming, and the streaming of movies and live events continues to rise, providers of these services are striking long-term contracts to IP Upstream carriers. Reaching deals with streaming companies has been critical to Level 3’s revenue growth. [3]

Business Growth

Level 3 reported a loss of $622 on $3.65 billion in 2010 revenues, compared to a loss of $618 million on $3.76 billion in revenues in 2009.[4] The declines in profitability and revenues can be partially attributed to a decline sales from large companies. In addition, expenses have risen as a result of high interest costs associated with the company’s debt load. However, contracts with companies providing streaming services has the potential of providing new sources of revenue growth.[5]

Trends and Forces

Visual streaming services provides new growth area for diversified communications companies

Increases in consumer demand for online video, online gaming, streaming full-length movies and lives events has the potential of providing significant growth opportunities for communication services providers. In 2010, Americans spent as much time online as they did watching TV, and Level 3 expects that the amount of time spent streaming online to increase.[6] Level 3’s broadcast services network and Vyvx capabilities delivered approximately 15,000 video feeds month as well as major live events like the Super Bowl, which the network has delivered for the past 22 years. In 2010, Level 3 Communications’ IP Upstream service was selected to be a primary content delivery network (CDN) for Netflix's fast-growing streaming service.[7] However, this rapid growth is not without its costs. Level 3 says it will double its storage capacity to help accommodate the new contract. Expanding its services has the potential of forcing the company to increases its debt load, which would lead to significantly higher costs.[8]

Global Economic Crisis has forced many customers to cut or delay several communication services

In an effort to control or reduce costs, many of Level 3’s customers have deferred or foregone purchases of services.[9] In addition, customers have also had trouble making periodic payments. As a result, there has been a decline in demand for communication services, which has resulted in lower revenues for Level 3. Meanwhile, utility costs have remained relatively stable for communication companies, leading to tighter margins.[10] However, as the result of a gradual pick up in economic activity, Level 3’s profit margins on the Core Network Services have improved.[11] Increased economic activity has the potential of leading to increased revenues and profits on Level 3’s core operations.[12]

Telecommunications Companies

While rising demand for IP Upstream services provides a new growth opportunity, a slow economic recovery has led to decline in demand for many other services provided by diversified communication companies. In addition, competition for fewer contacts for many networking services has led to depressed margins.

LVLT's top three competitors in telecommunications are:[13]

References

  1. Reuters.com: Company profile for LVLT
  2. Reuters.com: Company profile for LVLT
  3. LVLT Company 10-K for 2010
  4. Morningstar.com: financials for LVLT
  5. LVLT Annual Report for 2010
  6. LVLT Annual Report for 2010
  7. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  8. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  9. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  10. Yahoo! Finance: Netflix/Level 3 Deal Underscores Communication Service Trends
  11. Yahoo! Finance: Level 3 1Q loss narrows
  12. Yahoo! Finance: Level 3 1Q loss narrows
  13. Hoovers: LVLT Competitor Fact Sheet. Retrieved on June 20, 2008.
  14. WikInvest: Sprint Nextel. Retrieved on June 26, 2008.
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