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Msg  170802 of 171800  at  11/27/2020 2:12:01 PM  by

fanfare

The following message was updated on 11/27/2020 2:18:30 PM.

 In response to msg 170800 by  dklein
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Re: LVLT ebitda growth, etc

 ""If they cannot turn GM$ around in the next say 2 qtrs they have a problem competing IMO""

Yup, we gotta keep an eye on GM's.  I expect to see better granularity moving forward.  I'm not putting a 2qtr limitation as I continue to factor, but we need to be able to see where the inflection points land.  We're moving forward, but the mass is large, and the lifting is slow.  

We can dig into the numbers, but I'm pretty sure you, jojo, and others have illustrated the pert points.  Looking out, from the inside, we need to study cable co's DOCSIS-fiber constructs and try to understand the dynamics.  Running coax is just a whole lot cheaper, but it cannot compete with PON deployments in SMB, consumer, or large enterprise.  There is evidence all around us that points this out, but 95% of the world's investors don't see it.  There is a huge difference between 1 gig sustained, and a 'burst rate'.  Not to mention the caps and throttling that is rampant, but necessary for the likes of CMCSA, Charter, and all the regional players hooked up through Cogent.  Without it, their margins would shrink, and their networks would get slammed.... and they'd be hiring and working overtime shifts to compensate.  In addition, the concept of symmetry goes beyond just 'ul/dl' issues.  Distributed (sharing) bandwidth via DOCSIS 3.x creates challenges with d/l when networks are busy. But now add in u/l, and you have a disaster waiting to happen.  Even if they can advertise 'confidence in the ability to provide symmetrical connects' with DOCSIS tech, it will never come close to what fiber can provide.  Remember, COAX is copper... with more insulation.  

What does all this mean?  It's just not easy to quantify for anyone who does not have a really good understanding on how these constructs work, where they are strong, where they are weak etc.  The weakest link in the FTTX option is the 'time' and $$ it takes to deploy.  Cheaper options work, but will they scale?  DOCSIS developers, and the companies that use the tech, strongly tout that COAX cable can 'do it all'.  It can't.  It is not future proof (though it is often easy to convince ppl otherwise).  Anyone watch the news on Fox, MSNBC, ABC, NBC, CBS, Newsmax?  When they have a guest, via video feed.... what do you see?  People connecting from home ... even those in metro areas, in offices etc. What do you notice?  Do you see a nice clean flow of image/sound that matches up?  You don't, and it has been getting worse for a long time now. Finding where the bottlenecks are is not always easy, but it often points to u/l from the remote location.   If you are 'geeked to the gills', you watch many many indicators.  Some are a bit technical and require you to peek inside the network, and others show up in every day life.  It is not something that can be 'taught' in a single semester.  As I've said before: FB, GOOG, and even NFLX has been facing challenges for years now. Edge locations for these platforms were needed 5 yrs ago. Edge capacity that is 'on net' with new fiber is going to prove a significant advantage going forward.  BTW, SNAP servers are all virtual/cloud, and SNAP is still not working half the time.  Guess who is working nearly flawlessly?  TikTok, and they've been solid right out of the gate after getting bought (musical.ly) by ByteDance (China).  

So where does this leave us when we're looking at GM's, FCF, Topline, EBITDA, EPS etc.?  We can run the numbers until we are all in 'circles', but the story is not complete unless we can look at what is happening in the macro, and understand the 'micro' (assets) that a company has to address the needs of a market.   FTTX is costly, and it takes time.  VZ has been deploying consumer PON (FiOS) for a long time now.  Their broadband numbers are finally starting to show merit.   

The question is, and has always been, can we "run long enough on fuel until the wind hits our sails?'  Jeff may have missed a step on 'new tech culture', but he is still razor sharp on ops and finance.  He's doing it.  Interest rates have helped, but I think he would have gotten it done either way.   

I am sometimes surprised at how long it takes for things to play out.  When I first invested in TWLO, I remember thinking; "what took so long"?  Same with about 20 other disruptive companies/techs that finally hit the 'mainstream eyes' over the years.  I was grounded in science long before I learned about the stock market... and I've been in the latter for well over 27 yrs now. I held AMZN for 13 yrs before it really began to pay off.  

POST left us a mess.  There's just no polite way of saying it.  He clearly went through the motions to keep the job, but perhaps he knew of no other way.  We're getting it cleaned up.  Jeff is one hell of an integrator/problem solver.  COAX may seem like the best solution now, and it may continue for a while.  I can't make a determination on that.  What I do know is that nothing is going to compete with a symmetrical FTTX solution, and the need for such is becoming clear to more ppl every day.  SMB's may love cable now, but if they want to grow, and compete in the 'always instant online' world, they are going to take a fiber connection when it is available.  I don't care how many DOCSIS 3.x solutions cross our bow; when someone arrives with fiber .... everyone with access will switch, and then you will see how we compete.  Also, and this is usually not detectable by the average user, "On-net" is going to be a differentiator going forward.  

We keep an eye on the numbers, because we need to know how much fuel we have on hand while we are "crossing the Pac".  Right now, I think we have a 2-3 year supply as long as the trend continues.  During this time, if the numbers hit a '3 minute warning' we need to re-assess.  In the meantime, we don't want to get any 'tender offers' from private players for 14.75/share*.  We want to collect our dividends while Jeff and his team do the heavy lifting.  I'll be on the 'top decks' gathering sun, collecting $$, and thinking about hooking bluefin.  

*I think CMCST, ZOOM, TMUS, and a few others, would raise quite a fuss before letting that happen ... but then again, concessions are often a great octane boost.
 
Have a good weekend, everyone.  




 


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Replies
Msg # Subject Author Recs Date Posted
170806 Re: LVLT ebitda growth, etc thinkith 0 11/27/2020 3:06:26 PM
170811 Re: LVLT ebitda growth, etc (fanfare) from6454 0 11/27/2020 4:45:31 PM
170812 Re: LVLT ebitda growth, a plan jojogumabew 3 11/27/2020 7:30:54 PM








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