Level 3 Cuts Jobs, CDN Group Still Growing; Should Do $45-50 Million

Level 3 (LVLT) announced yesterday that it would be laying off 450 employees in North America or about 8% of its total workforce. While that's not good news for the company as a whole, the company has confirmed that the CDN group is not being affected and none of the cuts are coming from the content delivery markets group.While I expect a lot of the 115 open jobs listed on Level 3's website to disappear, Level 3 is currently looking to fill various positions in the CDN group.

As we put the final touches on our Frost & Sullivan report entitled World Video Content Delivery Networks Market, which breaks out CDN video revenue and market share, Level 3 will do between $45-50 million in total CDN revenue this year. While most of that revenue comes from small object delivery and not video, Level 3 is showing some good progress with its video CDN offering. $50 million in revenue for 2008 won't make any impact on Level 3's total company revenue, but it would rank them at number four in the industry based on total CDN revenue behind Akamai (AKAM), Limelight (LLNW) and CDNetworks.

That being said, Level 3's content delivery group can easily be affected if the rest of Level 3's businesses can't increase revenue, cut costs and reduce its debt. The job cuts Monday is intended to help reduce its costs but it is to be seen if that will be enough even in the short-term.

Disclosure: None

Comments

[Savoy Sam:]

Last Qtr alone Level3 had $98M in revenue in its Content Markets Group. Where do you arrive at the $50M in total revenue for 2008 in CDN. Obviously we are talking about two different definitions of CDN. Where and from whom in Level 3 did you get your definition and dollar amount from?
Thanks.

2008 Dec 09 07:54 AM

[Dan Rayburn:]

Level 3 classifies many different products under the "content markets group". I am only talking about revenue received for the delivery of content via their CDN product for small object delivery, video streaming/downloads and software downloads.

2008 Dec 09 09:52 AM

[Savoy Sam:]

First of all, anyone who has ever listened to Crowe speak on the subject - Level 3 is NOT in the business of small object delivery.

Secondly, you still have not told us how you arrived at the $50M figure because it most certainly not provided by Level 3.


On Dec 09 09:52 AM Dan Rayburn wrote:

> Level 3 classifies many different products under the "content markets
> group". I am only talking about revenue received for the delivery
> of content via their CDN product for small object delivery, video
> streaming/downloads and software downloads.

2008 Dec 10 10:25 AM

[Dan Rayburn:]

You are right on the small object part. I had already updated the post on my blog to say download, not small object, as I meant download and not streaming, but SeekingAlpha has not updated their post. The original post is at: blog.streamingmedia.co...

Of course I am not going to tell you who told me the number. I got the information based on the assurance I would not disclose how I got it. When will readers learn that if we said who told us, that person, or company, would never talk to us again.

2008 Dec 10 12:31 PM