Mark Gottlieb – IR
John Legere – CEO
John Kritzmacher – EVP and CFO
Dave Carey – EVP and Chief Marketing Officer
Donna Jaegers – D.A. Davidson
Global Crossing Ltd. (GLBC) Q4 2010 Earnings Conference Call February 23, 2011 9:00 AM ET
Ladies and gentlemen, thank you for standing by. Welcome to the Global Crossing fourth quarter and full year 2010 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator instructions) As a reminder, this conference is being recorded today, Wednesday, February 23, 2011. I would now like to turn the conference over to Mr. Mark Gottlieb, Senior Vice President, Investor Relations. Please go ahead.
Thank you, Tamika. Good morning, everyone, and thank you for joining us today for the fourth quarter and full year 2010 earnings call. John Legere, our Chief Executive Officer, and, John Kritzmacher, our Chief Financial Officer, are here with us today. They will each share their comments, after which we will open the call for some questions.
Presentation slides can be viewed online to help follow our prepared remarks today. They are available via webcast, which you can access through our Investor Relations site if you go to www.globalcrossing.com, access the Investor site and follow the links to the webcast.
Please note that the financial results discussed on this call are unaudited results and are subject to adjustments in our final audited results to be included in our annual report on Form 10-K. Next I’d like to remind everyone that statements made herein that are not historical financial results are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934.
Our actual results could differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are contained in our reports filed or furnished to the Securities and Exchange Commission, including our annual reports on Form 10-K and quarterly reports on Form 10-Q.
We are not obligated to publicly update or revise these forward-looking statements to reflect future events or developments except as required by law. Information contained herein is in summary format only and is qualified in its entirety by reference to the financial statements and other information contained in our forms 10-K and 10-Q.
We refer you to our financial press releases posted at www.globalcrossing.com, which include explanations of and reconciliations with the closest GAAP financial measures for our non-GAAP measures, such as operating income before D&A, free cash flow, and constant currency measures.
With that, I’ll turn the call over to John Legere.
Okay. Thank you, Mark. Good morning, good afternoon, and good evening, and thank you, everybody, for joining us. 2010 was a year of consistent demonstrated progress on our strategy and on our operational financial performance. We invested in our global assets, added to the depth and breadth of our product portfolio, improved our productivity and efficiently allocated our capital. This contributed to four quarters of sequential growth in our strategic invest and grow revenue, improved revenue mix, higher margins, as well as our third consecutive year of positive free cash flow.
The momentum in our business positions us well going into 2011. While the environment varied by geographical region, we continue to see improvement in market fundamentals related to demand and are not seeing any major changes in pricing trends from the prior period. We continue to improve our competitive position to meet this demand with key investments in our product offerings and core networks, expansion into new markets, combined with the commitment to customer experience. We believe these are all fundamental drivers of our current and future growth.
We see sustained strength in the underlying fundamental driving demand. These include continued globalization by multi-national enterprises, adoption of IT technologies and converged applications, and a proliferation of IP video consumption in both consumer and enterprise markets.
All of this leads to a strong demand for high performance and intelligent transport, data center infrastructure, tailored solutions for horizontal and vertical market applications, and basic IP transit services. As a result, we are increasingly targeting our investments in deploying our unique global assets to deliver against these demand trends with increasing focus on value-added applications, and we are deploying resources to sell into markets where these applications are growing fast.
Now, before turning to John Kritzmacher for a detailed discussion of our financial results, I will review some key highlights of our business. I will briefly discuss what we are seeing in the market, our investment initiatives and plans for 2011. I will conclude with a summary of our financial targets for 2011, which John Kritzmacher will then discuss in much more detail. Let’s get started.
2010 was a year of marked progress as we continue to move our company up the value chain and position ourselves for long-term profitable growth. We continued to expand our data center assets and managed services capability and finished the year with approximately $140 million of revenue from data center and collocation services. Increasingly, these services are being bundled with network services and applications to deliver integrated solutions.
We introduced several new value-added solutions with significant growth potential. For example, we enhanced and expanded our global Ethernet service to offer customers more efficient performance in greater control with end-to-end service-level guarantees. We deployed a telepresence offer along with a series of unified communication solutions that allow customers to custom design applications to work with our services, stream video, and simply use with desktop and mobile applications – simplified use.
And we entered the IP video broadcast market through our acquisition of Genesis Networks, now called Global Crossing Genesis Solutions. We recently expanded the Genesis service capability across Latin America, leveraging our substantial network and market presence in that growing region. We invested in network capacity, upgrading our terrestrial and subsea networks and deploying 40 gigabyte technology for the first time on one of our subsea systems.
We also expanded our service reach through new points of presence or expanded interconnect partnerships to meet customer demand in Eastern Europe, the Middle East, Asia, and Latin America. As we said before, our ability to address our customers’ global requirements is an important part of our differentiated value proposition. We believe our global capability will become even more valuable over time.
As we scale the business, we are maintaining an intense focus on delivering high quality customer experience by investing in customer facing systems and processes that get customers tools to monitor, control and manage their services and networks in real time. These investments enable us to realize operating leverage as we grow the business while continuing to deliver unsurpassed levels of customer satisfaction.
And finally, we selectively invested in sales resources, with sales headcount up about 6% for the year. We will continue with these investments in 2011. In 2010, adherence to our strategy and focus on execution produced revenue growth and improved margins. Our fourth quarter results completed a year of growth, with sequential increases in invest and grow revenues on a constant currency basis every quarter during the year, with the growth rate increasing later in the year.
We also generated significant growth in OIBDA and expanded margin percentage for the year. In the fourth quarter, invest and grow revenue increased 8% year-over-year, OIBDA increased 46% year-over-year, and we generated positive free cash flow of $102 million. For the full year, invest and grow revenue increased 6%, OIBDA increased 17%, and we generated positive free cash flow for the third consecutive year. These results are in line with the expectation we shared with you when we reported third quarter 2010 results.
As you know, we do business in markets around the world, each with their own characteristics. Let me share with you what we are seeing. First, demand in Latin America remains strong, particularly in Brazil and Colombia. Data center and managed services are among the key drivers of this strong demand.
Second, the Rest of World region, which consists primarily of our North American operations, continues to show signs of improving demand as we see increased level of activity and as enterprises increase their IT investments. In particular, North American demand is driven by MPLS-based VPN over IP and Ethernet, low-latency high-speed connectivity, as well as our portfolio of IP-based voice and collaboration solutions.
Third, in the UK, we posted modest revenue growth, entered into long-term contracts for services to two of our largest UK customers, and built momentum with new quota-bearing sales resources focused on the UK commercial enterprise market. We also positioned the company for opportunities relating to the UK government deployment with next generation backbone network. Going forward, we expect to see continued growth in our GC Impsat and Rest of World regions, with improving opportunities for growth in the highly competitive UK market.
In the fourth quarter, we generated average monthly order volumes of $4.4 million in monthly recurring revenues, and the average for the entire year was up 22% from 2009 to $4.5 million. Order volumes were higher in each quarter of 2010 than they were during any quarter of 2009. Order performance as a leading indicator demonstrates solid traction in the market and is an encouraging sign reflecting momentum in the business for 2011.
Included in these order numbers are larger deals we are winning from leading enterprises with multi-national requirements across many verticals. We are winning deals that indicate customers increasingly trust Global Crossing with larger and higher value-added portions of their global network requirements.
Examples include value-added integrated solutions that incorporate data center and hosting services with storage, security and monitoring; and IP, Ethernet networks to enable large transfer of large files involved in host production media services, and a fully managed converged network for voice, data and video services serving locations across North America and Latin America.
We are also recognized in 2010 for our industry-leading customer satisfaction in converged IP services. Specifically, Global Crossing was cited for achieving the highest aggregate customer satisfaction score compared to other leading global IP VPN service providers in the customer satisfaction study published by Telemark Services, a leading market research firm in the industry.
In addition, we were recognized with industry awards for our VPN and Ethernet offerings by Frost & Sullivan in the Metro Ethernet Forum. This recognition is important because our industry-leading customer satisfaction and product capabilities enable us to acquire market share and to win incremental business from our existing customers.
As I’ve highlighted, Global Crossing’s strategy has developed higher value-add, higher margin products and services to capture growth opportunities for advanced IP, Ethernet and data center solutions, as well as the value-added applications they enable.
We will be investing in assets and products around the world to support volume growth across our transport and data center infrastructure and to enhance value-added capabilities and solutions. Examples include low latency solutions, a broader range of broadcast and video transport solutions, managed security services, a new suite of unified communication offers, cloud services, 40 gigabyte transport solutions, geographic expansions, and increased availability of our hosted data center and virtualization capabilities.
We will also continue to invest in our people with further increases planned this year in sales headcount. We are entering 2011 with solid momentum, having delivered four quarters of sequential constant currency revenue growth in our strategic invest and grow revenue. The growth rate increased later in the year, and we delivered further improvement in margins throughout 2010.
In 2011, we are targeting invest and grow revenue growth in the 6% to 9% range, and we will carefully increase our investments in our people, network and products to ensure we have the assets and capabilities in data centers and value-added services, position the company for significant growth opportunities I discussed, while managing cost and capital to generate positive free cash flow for the fourth consecutive year.
John will discuss this in more detail in a few minutes. But one of the things you will hear is that we will increase investment in the business with higher operating expense for sales headcount and some other items, along with a bit more capital for things like data centers and other managed services. This speaks to our confidence in the outlook for the business and the importance of investing in our people, our assets and our product portfolios.
In summary, our 2010 financial results represent another year of growth and margin improvement, providing good momentum for the ongoing growth of our business. We will continue to invest to improve our differentiated value proposition and position ourselves to seize high growth opportunities in 2011 and beyond.
Now I’ll turn it over to John Kritzmacher for a detailed discussion of our financial performance. John?
Thanks, John, and hello, everyone. Throughout 2010, we continued to improve the operational momentum of our business and we finished the year with a strong fourth quarter. In constant currency terms, we completed the year with four quarters of sequential improvement in our strategic invest and grow revenue. And while we came up 1 percentage point short of the revenue growth rate range anticipated in our annual guidance provided last February, we did deliver on the annual OIBDA and free cash flow guidance we provided at that time.
In my remarks today, I will review our financial results for the fourth quarter and provide a bit more color on the full year of 2010. I will then expand a bit more on John’s comments regarding our expectations for 2011. In the fourth quarter, the company generated consolidated revenue of $683 million, an increase of 5%, both sequentially and year-over-year. On a constant currency basis, consolidated revenue increased 4% sequentially and 6% year-over-year. Both sequentially and year-over-year, revenue growth was driven by increases in our invest and grow business.
In the fourth quarter, the company generated invest and grow revenue of $602 million, a sequential increase of $34 million or 6% and a year-over-year increase of $45 million or 8%. On a constant currency basis, invest and grow revenue increased 5% sequentially and 9% year-over-year.
In GCUK, invest and grow revenue in the quarter included a non-recurring benefit of $6 million for the completion of our customer contracts and $7 million for equipment sales related to a new managed services contract. There were no other individually noteworthy non-recurring revenue items in the quarter. On a segment basis, fourth quarter invest and grow revenues for Rest of World, GC Impsat and GCUK were $335 million, $151 million, and $128 million respectively.
In constant currency terms, Rest of World increased 5% sequentially and 7% year-over-year. The sequential growth in Rest of World was primarily driven by our North America region where we are capitalizing on continued conversions to MPLS networks and adoption of IP-based solutions. In addition, Genesis Solutions, the managed video transport company we acquired at the end of October, contributed $4 million of invest and grow revenue in the quarter, and that reported entirely in our Rest of World segment.
GC Impsat increased 3% sequentially and 14% year-over-year in constant currency terms. We continue to experience solid growth in GC Impsat, especially in Brazil, Argentina and Colombia. In addition, we continue to improve our revenue mix with higher margin data center managed services and IT solutions driving our growth.
And finally, GCUK increased 12% sequentially and 8% year-over-year in constant currency terms. As previously noted, GCUK revenue in the quarter included $6 million for the completion of a customer contract and $7 million for equipment related to a new contract for managed services.
Moving on to wholesale voice, revenue in the fourth quarter was $81 million, representing a sequential increase of 2% and a year-over-year decrease of 13%. We continue to closely manage this business for margin and may experience fluctuations in revenue from quarter to quarter.
Gross margin in the quarter was $231 million, a sequential increase of $23 million and a year-over-year increase of $41 million. The sequential and year-over-year improvements were driven by revenue growth and improved sales mix, including $6 million in margin associated with the previously mentioned contract completion and equipment sale, along with a benefit of $4 million due to favorable adjustments in provisions for contingent liabilities.
Foreign exchange did not materially impact gross margin either sequentially or year-over-year. Gross margin as a percentage of revenue improved to 33.8% in the fourth quarter compared to 32.1% in the prior quarter and 29.2% in the year-ago period.
For the fourth quarter, we reported $110 million in SG&A expense, a sequential increase of $11 million, including an unfavorable foreign exchange impact of $1 million. The sequential increase was principally due to increases in salary and benefits as well as increases in bad debt and non-income-tax expenses, which were below our typical run rates in the prior quarter.
Year-over-year, SG&A increased $3 million, including a favorable foreign exchange impact of $1 million. The year-over-year increase in SG&A was primarily driven by an increase in salaries and benefits. We accrued a total of $5 million for incentive compensation in the quarter, an increase of $2 million sequentially and a decrease of $3 million year-over-year. The $5 million of incentive compensation recorded in the quarter consisted of a $6 million charge for stock-based accruals, primarily for long-term incentive stock ramp, partially offset by a $1 million reduction in cash accruals for the 2010 annual bonus program.
For the year 2010, cash-based annual incentive compensation increased by $1 million to $19 million, and stock-based long-term incentive compensation increased by $2 million to $20 million. As a reminder, approximately 55% of the incentive compensation accrual is reflected in cost of revenue and the remainder is reflected in SG&A.
OIBDA in the fourth quarter was $121 million, a sequential increase of $12 million and a year-over-year increase of $38 million. On a consolidated basis, foreign exchange did not materially impact the sequential or year-over-year improvements. OIBDA as a percentage of revenue was 18% in the fourth quarter, approximately 100 basis points higher than the prior quarter and 500 basis points higher than the year-ago period.
On a segment basis for the fourth quarter, Rest of World’s OIBDA was $47 million, a sequential increase of $9 million. The sequential increase was primarily due to revenue growth and improved sales mix, the previously mentioned $4 million favorable adjustments in provisions for contingent liabilities, and a $4 million increase in inter-company sales to the GC Impsat segment. These favorable movements in the quarter were partially offset by increases in salaries and benefits, bad debt expense and non-income-tax expense.
Year-over-year Rest of World’s OIBDA increased $21 million. The increase was primarily due to revenue growth, improved sales mix, and the previously mentioned $4 million favorable adjustments in provisions for contingent liabilities. GC Impsat’s OIBDA was $46 million, a decrease of $3 million sequentially and an increase of $13 million year-over year.
The sequential decrease was primarily driven by an increase in intercompany access costs and higher accrued incentive compensation, partially offset by revenue growth. Year-over-year, the OIBDA increase was primarily driven by higher revenue and improved sales mix, partially offset by an increase in salaries and benefits.
And finally, GCUK’s OIBDA was $28 million, an increase of $6 million sequentially and $4 million year-over-year. The sequential and year-over-year improvements were primarily driven by $5 million of margin associated with the previously mentioned contract completion and equipment sale.
Free cash flow was $16 million for the year, marking our third consecutive year of positive free cash flow. Free cash flow for the year decreased $16 million compared with 2009 principally driven by higher cash payments for interests and incentive compensation in 2010, as well as a larger benefit from improved collections in 2009. As a reminder, annual incentive compensation was primarily paid in cash in 2010 versus stock in 2009.
For the fourth quarter, we reported free cash flow of $102 million compared with negative free cash flow of $1 million in the prior quarter and free cash flow of $72 million in the fourth quarter of 2009. The sequential quarterly improvement in free cash flow was largely due to improved working capital performance, increased OIBDA, higher sales of IRUs and prepaid services, and lower cash interest, partially offset by higher capital expenditures. The year-over-year increase in quarterly free cash flow was principally driven by improved OIBDA and higher sales of IRUs and prepaid services.
Cash flow provided by operating activities for the quarter was $149 million, including cash from operating working capital of $70 million after interest payments of $32 million. We received $55 million in proceeds from the sale of IRUs and prepaid services, and we used $64 million for capital expenditures and principal payments on capital leases.
In addition to fund various equipment purchases, we entered into $7 million of new capital leases and other financing arrangements during the fourth quarter. Since our last call, we completed the issuance of $150 million of senior unsecured notes due in 2019. We used the proceeds of this issuance to repay the 5% convertible notes that were due in May of 2011. Our next major maturity relates to the GCUK notes, which are due in December of 2014.
At the end of the fourth quarter, our total debt was $1.46 billion, including major maturities of $1.32 billion and capital leases and other debt of $143 million. As previously noted, we entered into $7 million of new capital leases and other equipment financing arrangements. In addition to repayment of the 5% convertible notes, we also made principle payments of $43 million, including $17 million for capital leases, $12 million for repayment of notes in Colombia, and $12 million for debt repaid in connection with the acquisition of Genesis Networks.
We ended the year with a total cash balance of $381 million, including $9 million of restricted cash. This compares to an ending cash balance of $330 million at the end of the third quarter, including $19 million of restricted cash, and an ending cash balance of $493 million at the end of 2009, including $16 million of restricted cash.
As of December 31, we had 60.5 million common shares outstanding. In addition to these common shares, our fully diluted share count includes 18 million preferred shares and 3 million for share-based awards not including performance-based awards.
Before getting into 2011 guidance, let me take a brief moment to summarize our 2010 full year results. In 2010, invest and grow revenues increased by 6% and accounted for 87% of the total revenue as compared with 85% in 2009. Our continued growth and improvement in sales mix resulted in 2010 gross margin of 32%, a gain of 150 basis points as compared to 2009.
Building upon our strong operating leverage, OIBDA grew to $400 million in 2010, a year-over-year improvement of 17%. OIBDA margin improved to 15.3%, an improvement of nearly 200 basis points as compared to 2009. And finally, as noted earlier, we produced $16 million of free cash flow in 2010, marking our third consecutive year of positive free cash flow.
Cash flow from operating activities in 2010 totaled $183 million after interest payments of $157 million in sales of IRUs and prepaid services of $132 million. In 2010, we deployed $223 million of gross capital, including $56 million of new capital leases and vendor financing, resulting in purchases of property and equipment of $167 million.
Now turning to 2011, this year we plan to improve the pace of growth in our strategic invest and grow revenue. Positive free cash flow remains a priority and we will continue to carefully manage capital expenditures while we accelerate investments in managed solutions, including data center and cloud services to take advantage of attractive growth opportunities.
Based on current foreign exchange rates, we expect invest and grow revenue to increase by approximately 6% to 9% in 2011 as compared to 6% in 2010. Our expectation for accelerated growth in 2011 reflects the sequential growth momentum established in 2010, supported by gains from our investments, including the continued deployment of additional quota-bearing sales resources and the acquisition of Genesis late in 2010. All three of our segments are expected to contribute to our revenue growth in 2011.
At the midpoint of our 6% to 9% revenue growth range, the company expects OIBDA to grow to roughly $425 million, reflecting OIBDA contribution of approximately 50% of incremental invest and grow revenue, partially offset by higher costs. More specifically, we expect approximately $20 million in higher operating expenses, primarily related to salary increases, higher sales headcount, and restoration of the 401(k) company match.
And we anticipate approximately $40 million in higher accrued incentive compensation expense, reflecting funding of the annual bonus at target in 2011 as compared to 35% target in 2010. We know that the annual incentive is based on internal targets for OIBDA and free cash flow. At levels of revenue higher or lower than the midpoint of our revenue guidance range, we would expect variances in OIBDA and free cash flow performance that would impact the annual incentive compensation accrual.
And finally, with respect to cash, we expect to deliver a fourth consecutive year of positive free cash flow as we continue to invest in significant growth opportunities while also prudently managing for cash. We will continue to carefully deploy our capital in 2011 and we expect our gross purchase of equipment, including lease capital, to be approximately 10% of invest and grow revenue. We are also planning for somewhat lower sales of IRUs and prepaid services than in 2010.
As you start thinking about our performance for the first quarter of 2011, please keep in mind that we typically experience flat to modest sequential revenue growth given the concentration of annual contract renewals at year-end. In addition, we expect to accrue annual incentive compensation at or close to 100% target in the first quarter of the year. Sequentially, that assumption would increase our operating expenses by approximately $15 million as compared to the fourth quarter of 2010. Our first quarter expenses will also include approximately $3 million of severance expense for actions related to targeted productivity gains.
And finally, please take note of the non-recurring items called out in our fourth quarter results today, including the $13 million of revenue and $5 million of OIBDA associated with the UK contract completion and equipment sale, as well as the $4 million of OIBDA benefit from the adjustments in provisions for contingent liabilities.
In summary, our 2010 performance demonstrates sustained momentum in improving our financial performance. We completed the year with four quarters of sequential growth in our strategic invest and grow revenue, and the pace of sequential growth improved as we made our way through the year. We positioned the business to continue moving up the customer value chain with investments in high growth managed service offerings such as data centers and video transport, including our acquisition of Genesis.
Our 2010 growth and improvement in sales mix together with the operating leverage in our business resulted in strong gains in OIBDA and OIBDA margin. Full year invest and grow revenue and OIBDA increased by 6% and 17% respectively, while full year OIBDA margin improved by nearly 200 basis points. In addition, 2010 marks the third consecutive year of positive free cash flow for the company.
For 2011, we are squarely focused on improving the pace of the growth in our invest and grow revenue, and we are positioning the business strategically for sustained long-term growth with increased investments in value-added services and quota-bearing sales resources. Revenue acceleration together with the strong operating leverage in our business will enable us to make these strategic investments while delivering the fourth consecutive year of positive free cash flow.
This completes my prepared comments. And with that, I’ll turn the call over to the operator for questions.
Thank you. (Operator instructions) Our first question is from the line of Donna Jaegers with D.A. Davidson. Please proceed with your question.
Donna Jaegers – D.A. Davidson
Hi, guys. Thanks for taking the questions. Two quick ones. On the $4 million benefit from the change in contingent liabilities in the Rest of World OIBDA, can you give us a little more color on exactly what that was? And then I have a follow-up question on data centers.
Sure. Donna, it’s John. The change in contingent liabilities essentially relates to some dual-dated [ph] contingent liabilities for legal matters that we concluded were no longer required based on our position on those particular items. And so we believe that it was time to release them.
Donna Jaegers – D.A. Davidson
Okay. So the lawsuit has been settled or there has been –?
Actually, we don’t go too far into it. In one case that’s the more significant of the two, this most relevant statute of limitations in terms of the litigation had expired. So we had put up the liability, and based on our examination, that five-year statute of limitations on the matter had expired.
Donna Jaegers – D.A. Davidson
Okay. And then on your data center strategy and what you have now, the data centers that you have in Latin America, you guys have really filled those up over the last year. Can you talk about – do you have numbers as far as number of square feet that you have in Latin America and what capacity utilization is there?
Donna, this is Dave Carey. I’ll try to take that question for you. Off of the top of my head, I don’t have the total square footage that we had fit up for the buildings square at my fingertips. I can follow up with you on that. I think the high point here is that we’ve seen very strong demand, particularly in Brazil and Colombia, as John highlighted in his comments. As we look at the investment program for 2011, looking into 2012, we actually will be building a new center in Sao Paolo and actually expanding the existing building in Colombia in order to stay ahead of that demand. There will be power augments at the other sites, particularly (inaudible) in order to develop the existing footprint that’s there. So we’ve got a good inventory supply for 2011 business requirements, but looking – we have to look into this obviously on a multi-year basis for [ph] additional construction activities (inaudible) ourselves into 2012.
Donna Jaegers – D.A. Davidson
Okay. Great. Thanks, David. That’s helpful. And then you guys announced plans to build some centers in the US. Can you expand on those at this time as far as the plans? Yes.
Yes. Two ideas on this one. Let me touch on Europe as well because we’ve got development underway there. For this year, we have planned expansions in Amsterdam, which is in flight already. That’s very successful there. As well as in London, and we’ll fitting up another data hall there and potentially looking to actually (inaudible) there. Looking to the US, we would like to round out the service offering here in the US. We are actually looking – we've got a substantial cello portfolio, as I think you already know, with somewhat over 100 sites of collocation space available. But specific to the hosting and eventually the cloud services that we want to round up portfolio, we are looking to turn up one or two locations. We are actually going to partner with an existing infrastructure provider, but apply our operating model and service platforms in their environment. So that will allow us to get a service offering here in the US.
Donna Jaegers – D.A. Davidson
Donna, I appreciate those questions around our data center capability because we talked about – at $140 million and growing, along with the ability for our data center and collo to increasingly be bundled with the rest of our network services and applications to deliver integrated solutions, we are inside of our company one of the larger and more profitable data center players, not just in Latin America but around the world. And I think that’s a piece that goes unnoticed sometime, but I appreciate you pointing it out.
Donna Jaegers – D.A. Davidson
Okay. Thanks, John.
Okay. We have no further questions at this point. So I will take that as a clarification that we were very thorough in our comments, and I’ll just thank everybody for joining us and look forward to updating you again with our first quarter results. Thank you very much.
Thank you. Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation, and we ask that you disconnect your lines.