The company released second-quarter earnings yesterday, and revenue grew sequentially from $456 million to $461 million, while cost of revenue dropped 2% over the same time frame and 8% year over year to $393 million. Adjusted EBITDA (a useful metric for this company, given all the moving parts) improved to a loss of $17 million, versus a $62 million loss in the prior quarter.
Similar to compatriot Level 3
IP traffic on the company's network was up 65% in 2005, faster than the overall market's 49%, and the fast growth has continued into this year. Global Crossing thusly is positioned to do well, being one of the very few end-to-end-pure IP networks in the world -- a substantial advantage over competitors' often patchwork networks.
Management expects positive cash flow (a real landmark after years of cash burn) in the second half of 2006. Given the company's enterprise value of about $940 million, the valuation looks worthy of further due diligence as management's laser focus on profits at the expense of unprofitable revenue growth seems to be paying off. Still, keep in mind the industry is still working off the massive over-investments from the early part of the decade, so there are certain to be a few more bumps along the way of this turnaround.
However, large carriers like Deutsche Telekom
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