Will Level 3 Communications (LVLT) regain the past market capitalization of its glory days? LVLT became a Wall Street darling, the stock soaring to $132, on March 10, 2000, with 334 million shares boasting a market cap of$44 billion. Not long after the Internet bubble burst, companies with massivedebt and no earnings started to collapse, and LVLT was no exception. Some ofLVLT’s competitors declared bankruptcy, then emerged stronger, via strengthenedbalance sheets — one example is Global Crossing (GLBC).
But it’s been a long and painful road for loyal shareholders who never wavered,
clinging to their LVLT shares.
Fast forward to the present. LVLT is waiting for approval on the pending acquisition of GLBC. The resulting shares outstanding from this acquisition
will number approximately 3.9 billion. That would require a share price of $11.28 to match the market capitalization of $44 billion achieved when LVLT was a Wall Street darling. On the other hand, it shows the effects of dilution LVLT has had to endure to survive. Management gets an A+ at financial engineering, avoiding bankruptcy when others could not, but it came at a price. …. Read the full article at SA