Letter to Level 3's Board of Directors

Board of Directors

Level 3 Communications (LVLT)

Dear Board Members,

I write to you as a shareholder in Level 3 Communications. The recent statements during the Q3 earnings call were quite disturbing. Since you have another earning release scheduled for February I wanted to share my thought process regarding your performance. I admire management’s willingness to recognize mistakes; however, an entire executive team that clearly had no connection to converting revenue to profitability or an understanding of their operational challenges is totally unacceptable.

The management philosophy of Level 3 was described as conservative. I do not agree with Mr. Crowe’s assessment when you have highly paid executives that under perform and focus on acquisition rather than profitability. Operating at a loss it will be necessary to hire additional people increasing operational costs to make the product “provisionable.” The sales group will become disillusioned based on the company’s inability to deliver product and the need to be re-built as the “provision issues” are corrected. Again, I state this is not conservative and question the leadership of Level 3 and the Board’s decision to continue to follow its current management. Are the top executives taking pay cuts as a result of poor performance or just not realizing their full bonus potential? Personally, I have taken a 49% pay cut with Level 3 in the past year alone.

I found it equally disturbing that the management team was not capable of determining the proper technical expertise required to run the business they created and are forced to hire consultants to better asses their operational needs. My point being…what exactly do we pay them for other than speaking at technical forums and managing debt?

This is gross incompetence and has the same ugly face as the Lucents of the world. It is your responsibility to act and install management that is capable of converting revenue to profitability rather than adding to the already enormous debt.

I hope I am fortunate enough one day to have an employer that will allow me to reduce my profitability for the company by over 50% in one year and keep my job. My golf game will surely improve.

Read your press releases sometime…what a bunch of useless fluff to put out as this ship sinks.

Respectfully,

Dan Martelli

Shareholder/Business Development Manager

Disclosure: Author has a long position in LVLT

Comments

[BBSamSr:]

I feel your pain as I have held this since the low 6's and can not see the B/E point! A 68% loss in any stock but one with the possibilities this one has is just toooo much. Yes, I was Cramerized and held on too long. But I can only hope my Grand Kids will see this above 6 and will only have to write off a short loss if they sell.
(PS- My Son isn't even married yet so they can wait a couple of decades)

2008 Feb 28 04:35 PM