The author states, “The Akamai strategy uses distributed hosting servers and content caching.” Fine. Then he states, “The supposition by L3 that their fiber backbone will be a competitive advantage to a CDN is very much in question.” But then he launches into a discussion of the history of Digital Island and Sandpiper without address why it is “very much in question.” Where’s the beef?

The fact that the transaction values of what would become the Savvis assets LVLT bought declined since the peak of the market bubble doesn’t prove that their business values have also declined. Heck, the market caps of Microsoft, GE and a host of other growing companies have declined since the bubble’s peak.

I think the author makes a blunder when he assumes that if Savvis’ CDN assets were undervalued they would have been bought by Akamai. Not so fast, grasshopper. The value of Savvis’ assets to Akamai may well have been far less than they were to another company, especially LVLT. No company, not even Akamai, can afford to throw away money on useless acquisitions.

Relating the CDN issue to LVLT’s debt seems like a gratuitous low blow. Whether LVLT will succeed, or not, in the CDN business won’t be affected much by the relatively small increment of debt LVLT used to acquire the Savvis assets. And the existing debt is becoming more manageable by the month.

Then the author goes off, after failing to offer any real analysis concerning the CDN issue other than stating that Akamai would have done the acquisition if it had value, on his history of LVLT. He states, “The question that should be asked is: does the strategy of buying small CLECs or broken LH companies lead to the creation of a high quality company?” Then he fails to answer that question.

Next, the author critiques the January 11, 2007 investor presentation. He wants more details. Everyone wants details, but how much detail do we get from most companies? I will agree that LVLT, like virtually every company, is indeed at the mercy of its customers. Duh. The author then refers to a slide showing the push-out of LVLT’s debt. So, is this supposed to be bad?

Next, the author cites LVLT’s history of not earning profits. If this continues indefinitely, the company will be out of business. Double-duh.

The author then asks (notice that he asks a lot of questions without answering them?) whether LVLT’s leadership team has the skills to integrate their various acquisitions. I don’t know whether or not LVLT will successfully integrate its large plate of acquisitions, but I think it’s fair to say that so far they’ve done reasonably well—make that very well—with acquisitions.

Then he questions LVLT’s “extra fiber.” Sheesh, it’s not going to kill them. He says that there must be something wrong with LVLT’s business model, because they have yet to generate profits. In reality, there will be something wrong with the model if they can’t develop significant profits at some point, but the jury is still out on this issue. It’s okay to question LVLT’s history of GAAP losses, but it’s a bit dicey to draw firm conclusions for the future based on its history in a very rapidly developing and consolidating industry.

Amazingly, the author states that since Verizon’s and AT&T’s FTTx efforts—that are in their infancy—haven’t already forced long-haul backbone upgrades, then video isn’t going to consume a lot of bandwidth. By the way, what do you think has driven some of LVLT’s network upgrades? The author also seems to think more in terms of consumer demand (for video) than business demand. We’ll see. This jury hasn’t even been selected yet.

Then there’s some discussion of industry consolidations and (you guessed it) another question: “Who would want to buy an unprofitable company with $7.3 B in debt?” Two answers: (1) LVLT’s current shareholders, including Mason Hawkins, Bill Miller et al. They own the company, debt and all, presumably because they see a rosier future. (2) Any acquirer that thinks the future won’t necessarily develop like the past.

Finally, the author goes back to the CDN issue and simply states that he doubts LVLT can take market share from Akamai. Fine, but would you like to tell us why? By the way, although the CDN business may, or may not, work out well for LVLT, the company’s future story has a lot of irons in the fire.

There’s more to the article, but I need to get back to work. I’ll summarize for now by saying that the author is certainly entitled to his opinions, and he has shared some/many of them in his article. However, this article does not closely resemble real analysis. It reads more like something put together by yet another blogger long on time and short on substance. I wonder whether he could sell this stuff.