This is a play on the increased demand for IP content delivery. The demand for content on demand is growing exponentially (think Youtube and Video on Demand) and this company serves as the backbone for such services. With a huge network in place, they are set to take advantage of this and thrive. As the demand for bandwidth grows exponentially (80% growth last year, I believe), the cost of bandwidth continues to shrink, which would mean easy increase in profit margins. Unfortunately, this company is full of debt incurred over the past few years of rebuilding, but luckily, they are in a place to take advantage of low ten-year loan interest rates by refinancing and wiping out most of that debt. The analysts are bearish on this guy, and doubt that it's going to turn a profit in the next two years, but I believe that LVLT is going to blow their estimates out of the water and become profitable within that time frame.
I am long LVLT.
Bottom line: Speculative play because of history and debt, but is in a very favorable spot to deliver some very impressive numbers.
$6.18 (04/08/07)
Agree
Disagree
