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  • Its Been An Interesting Week In The Markets But Still Not Cheap [View instapost]
    Additional disclosure: Written puts for all stocks in this blog.
    Aug 21, 2015. 09:36 PM | Likes Like |Link to Comment
  • The Thing About Windows 10 [View article]
    I switched to 10 and it was painless for me also. I was surprised how easy the switch went and 10 seems much better than the previous versions.

    On the other side my daughter switched to 10 and her internet stopped working. Needless to say she is not pleased.
    Aug 11, 2015. 11:39 AM | 1 Like Like |Link to Comment
  • Is Level 3 Communications Still On Track For Growth? [View article]
    UPDATE: LVLT filed the 10-Q and the diluted share count is growing faster than projected. I've adjusted this to fit the current diluted share count. This is now built in to the interactive model.
    ( ) This lowers FV to 66.2.

    Diluted share count for the model is calculated by taking the total number of shares outstanding in the filing then adding the diluted shares listed under note (3) Earnings Per Share.

    I'm not sure why the jump in the diluted share count but it is a concern. Hopefully they can get this under control. Maybe it's the result of the combining of TWTC, don't know at this point.
    Aug 7, 2015. 09:54 AM | 1 Like Like |Link to Comment
  • Is Level 3 Communications Still On Track For Growth? [View article]
    I believe integration will run into early 2016
    Aug 5, 2015. 09:13 PM | Likes Like |Link to Comment
  • Is Level 3 Communications Still On Track For Growth? [View article]
    Hi fanfare and thanks for the kind words; always enjoy your posts over on IV. Management noted it was CNS Wholesale in the CC: "Turning to Wholesale, CNS revenue grew 5.8% this quarter. In the quarter, we settled some disputes that led to an unusually strong performance in Wholesale. In the third quarter, we expect Wholesale CNS revenue to decline slightly year-over-year." although they may be referring to NA CNS wholesale which I believe would still lead to an overall decline.
    Aug 5, 2015. 09:12 PM | 1 Like Like |Link to Comment
  • Is Level 3 Communications Still On Track For Growth? [View article]
    Hi mg, first the WVS revenue should be ignored, why? LVLT has no intention of increasing this revenue and just mange it, eventually down to zero IMO. It's no longer a part of the business they want. CNS Wholesale has been declining for some time but this will end and possibly soon. The company is focused on Enterprise which is the majority of revenue and will account for a higher % going forward. The YoY TTM enterprise growth was close to 7%. Older articles explained why enterprise will gradually become a higher % of overall revenue. Don't get me wrong, presently I'm not calling for double digit growth down the road but higher single digit growth.

    As far as pricing management said they continue to see little change in the overall pricing environment. Part of the problem has been currency exchange rate which I estimated to be about 47m this Q no small number but I'm sure you know currencies will eventually find equilibrium if not reverse down the road and gain back some strength but we can only speculate when it comes to exchange rates.

    I believe PE's are tied to EPS CAGR's not top line and long term we are looking at a CAGR over 20% for EPS.

    I think Storey said it best when it comes to integration and revenue growth: "As we continue the integration of our products, networks, and systems, we're laying the foundation for initiatives that are key to driving future profitable growth, making it easier for customers to do business with Level 3 while also optimizing our cost structure creates more compelling offers in the market."

    We'll see but we won't really know until 2016 when integration is complete.
    Aug 5, 2015. 08:53 PM | Likes Like |Link to Comment
  • Is Level 3 Communications Still On Track For Growth? [View article]
    Hi mg, Now that LVLT is digesting TWTC I'm not sure I'd agree that it is far too fragmented. I think LVLT's ability to become a cash generating machine without another acquisition is well established (well according to me); that said I'm no expect.

    I think the probability for LVLT to exceed top line expectations after the integration is complete (1st half 2016) is far higher than the reverse. Just another few percentage points push long term CAGR's for FCF and EPS substantially higher and they sit at double digit CAGR's today.

    Another metric that has the same affect as increasing growth is margin expansion so even if revenue growth remains as I have projected as of this article & margins continue to expand above my projections FCF and EPS CAGR's will be pushed even higher.

    I was surprised at the growth in gross margins and now wonder how high they can go. Previously I had margins topping out at 66.5% over the next several years and they are about there today. The other surprise was WS margins are now on par with ENT margins.

    My updated analysis has margins topping out at 68% thru 2019 but my gut tells me this is conservative. Bottom line margin expansion magnifies the single digit top line growth.
    Aug 5, 2015. 12:22 PM | 2 Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    No, only because we already know what this years D&A is and can model accordingly. I had 290m projected for Q2 and it came in at 288m. Although full year 2015 should come in at about $1,160. From here we can get an idea what the future holds. My analysis has this built in going forward.

    I'm working on an updated article but it takes me a little time to put everything together. Hopefully I'll submit something this week, next week at the latest.
    Aug 4, 2015. 02:16 PM | Likes Like |Link to Comment
  • Put Evolving Systems On Your Radar [View article]
    I've followed this stock over the years after it was brought to my attention by SeattleGoldMiner. That said I do not own the stock but agree there is room for growth while the dividend provides support on the downside. I just ran my "lack of" in depth analysis and see a possible FV of $11.10. All this assumes a healthy long term growth rate for FCF and EPS going forward.

    TTM income growth from operations before income taxes (based on management reporting) has gone from negative a year ago to extremely positive over the last 3 quarters up to 1Q15. I have been disappointed with FCF through 2014 but 1Q15 showed a very strong uptick. Whether this is an anomaly or trend is to be seen.

    I have done some tracking vs what I would call an in depth analysis so take my opinions (or FV) with a grain of salt. I have kept track of some metrics by quarter to graph progress or lack thereof. If anyone wants it (A simple Excel spreadsheet) just send me an email and I'll send you a copy. No analysis just historical data tracking.

    Before being asked why I do not own the stock, my answer is I'm very conservative and require a large discount to FV plus I have other another stock I think has more potential but I would be a buyer here in any correction that gives me the MOS I seek.
    Jul 17, 2015. 11:43 AM | Likes Like |Link to Comment
  • IIEX 2Q-2015 Newsletter [View instapost]
    I should note the S&P earnings growth trend is 7%. If I were to over-ride the trend and use say 5% earnings growth going forward the S&P growth from Fridays close would look like:

    5 Year: CAGR range (0.9%) to 3.4%; midpoint 1.4%

    10 Year: CAGR range 2.0% to 4.2%; midpoint 3.2%
    Jun 28, 2015. 02:23 PM | Likes Like |Link to Comment
  • Level 3 Communications: The Hidden Story [View article]
    This article was picked for the SA's weekly "Outstanding Performance Award". The Performance Award Case Study is at:
    Jun 16, 2015. 03:23 PM | Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    This week's SA Award winners:long idea on Level 3 (LVLT) @
    Jun 15, 2015. 03:59 PM | Likes Like |Link to Comment
  • Level 3 Communications: The Hidden Story [View article]
    LVLT is up over 100% since this article was published; the first article since I made LVLT the focus stock on my website. In response I’ll try to summarize my latest thinking in this comment. First congrats to anyone who took the advice in the article and used the remainder of 2013 to accumulate the stock.

    Although the article called this “The Hidden Story” it’s not as well hidden today from the general investment community but it’s still relatively unknown to many. I’ve noticed a few other positive articles recently on SA and a few other publications however this story is still unfolding, i.e., still in the early stages. My more recent article lays out a more complete picture. ( )

    CNS Wholesale revenue has been declining (as expected) but may be at an inflection point and starting to flatten out and possibly show slight growth in the near future. The largest segment (Enterprise) will continue to become a larger slice of the pie overtime and push gross margins higher. Level 3 has scale, i.e., they can grow revenue with minimal increases in operating costs (e.g., administrative, sales, etc.). The growth that flows through to free cash flow, EBITDA and earnings is substantial.

    Fair value is estimated at $73 as of this writing. Fair value is reflected in an interactive model publically available at:
    where you can change various rates for revenue growth, Capex etc., which adjusts fair value. I think the CNS revenue growth rates are easily achievable and think the potential is there to exceed these single digit rates. Finally I’ll repeat this idea is a multiyear investment horizon not a short-term trade and I believe this investment will continue to reward investors with large returns over the next several years based on yesterdays close.
    Jun 11, 2015. 09:45 AM | 1 Like Like |Link to Comment
  • Netflix: No Thanks - We'll Have Level 3 Instead [View article]
    Very nice article and it's no surprise to some I agree with the potential for LVLT. My own research projects 2019 EPS at $5.77+- based on single digit top line growth (which is in line with your comment "Therefore, the upside would be much higher.") although I hope I'm wrong when it comes to only single digit top line growth. If the market ever thought they might hit double digit revenue growth the stock would take off although results and management still point to single digit CNS revenue growth.

    At this point I think the downside has more to do with the market than LVLT, i.e., LVLT could take a large hit in any correction since it pays no dividend and has a high debt load although any hit not related to the fundamentals would be an opportunity IMO.

    That said I am very long LVLT at this point.
    Jun 10, 2015. 01:08 PM | 6 Likes Like |Link to Comment
  • Is Eastman Chemical Close To A Long-Term Buy? [View article]
    Hi Maddogbucko, the company separated from Kodak 21 years ago. They are two different (independent) companies so I would say the pensions for each company are unrelated. That said I'm not in the legal profession so you may want to contact a lawyer to see if you have any redress.
    Jun 8, 2015. 08:45 AM | 1 Like Like |Link to Comment