QUOTE AND NEWS
Telecom Ramblings  Jul 18  Comment 
At least one piece of the simmering interconnection dispute over Netflix data bottlenecks has been getting clearer lately. Following Netflix's 'crowded network' warning message to subscribers in June, last week Verizon put out a piece...
Market Intelligence Center  Jul 18  Comment 
Level 3 Communications Inc (LVLT) was identified by MarketIntelligenceCenter.com’s patented algorithms today after trading between $45.90 and $46.79 on Thursday before closing at $46.07. A diagonal spread using a long position in the Jan. '15...
Telecom Ramblings  Jul 14  Comment 
Ok, it's been a few weeks now since Level 3 Communications and tw telecom dropped their merger bombshell on the markets. There's now been time to absorb what it means for the two companies and the sector as a whole, and time to consider just what...
Telecom Ramblings  Jul 11  Comment 
Here's another set of quick takes on other news items this week worth noting: Zayo says it is providing connectivity to the Weld County School District in its home turf of norther Colorado.  It's an E-Rate project that will see Zayo provide...
Cloud Computing  Jul 10  Comment 
Imation Corp. (NYSE:IMN), a global data storage and information security company, today announced the availability of IronKey Workspace W700, the first Microsoft-certified Windows To Go devices to be FIPS 140-2 Level 3...
Telecom Ramblings  Jul 10  Comment 
Here's some quick takes on other news from around the sector this week: Logix Communications is finding some real growth opportunities down in Texas and Oklahoma with fiber. In an update yesterday they revealed their on-net building count has...
Motley Fool  Jul 10  Comment 
With major changes underway in the content delivery network space, what does the future hold for Level 3 Communications and Akamai Technologies?
Motley Fool  Jul 7  Comment 
The Level 3 Communications deal to buy TW Telecom provides solid synergies for the company, but the soaring stock price and high acquisition price leaves a questionable value for investors.
DailyFinance  Jul 3  Comment 
NEW YORK, NY -- (Marketwired) -- 07/02/14 -- Levi & Korsinsky notifies investors of tw telecom inc. ("tw telecom" or "the Company") (NASDAQ: TWTC) of claims of breaches of fiduciary duty and other violations of state law against the board of...
DailyFinance  Jul 2  Comment 
NEW YORK, NY -- (Marketwired) -- 07/02/14 -- Levi & Korsinsky notifies investors of tw telecom inc. ("tw telecom" or "the Company") (NASDAQ: TWTC) of claims of breaches of fiduciary duty and other violations of state law against the board of...




 


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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