Our November 2013 article, “Can Level 3 Communications Take Advantage Of The Opportunity Laid Before It?”, we examined past and future growth of the internet and how this could be a catalyst Level 3 Communications (LVLT) was built for. Some topics discussed were:
- Company background
- Catalysts fueling future demand
- Data from several internet studies
- Valuation and risk
Instead of repeating the above topics which would make this article exorbitantly long it’s recommended you read it for a better understanding, although not mandatory for this article. This article is a follow up examining level 3’s results and guidance to see if there is evidence Level 3 is capitalizing on the growing need for bandwidth.
Level 3 announced fourth quarter results and issued 2015 guidance on February 5, 2014. Ongoing trends based on management’s record and guidance will be a strong indicator of management’s success (or lack thereof) of converting opportunity into growing profits and cash generation. This article discusses the following:
- Revenue and focus
- Valuation revisited
- Final thoughts
REVENUE & FOCUS:
It’s important to understand how Level 3 reports revenue and their revised focus aimed directly at the opportunities ahead. This also will make clear why some missed the underlying growth momentum buried among other revenue categories; becoming more obvious with each earnings announcement leading some analysts to dramatically boost price targets.
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