Fishing For LaPerch
May 28, 2009
Fishing for a real good Telecom services stock … fish for the La Perch.
After several years of heavy lifting and cleaning up someone else’s mess, it was nice to see AboveNet, via CEO Bill LaPerch, get listed on the NYSE. Bill is an outstanding individual of great character and integrity–that alone has me buying the stock.
If you recall, AboveNet was the old Metromedia Fiber Network or MFN of the late 1990’s and early millennium. They were darlings of Wall Street with a simple, focused model: metropolitan fiber connectivity to buildings in large metro markets delivering data and IP services.
What was it that brought MFN to its knees and billions of dollars flushed through bankruptcy? Two things: Wall Street and greed.
Back in the day, Wall Street analysts’ started to dampen on MFN’s prospects as a network-centric company as such things like web hosting and data centers were the next “big thing” – sort of like collocation. Not wanting to lose value, the then MFN management entered into a series of acquisitions in concert with the herd mentality and advice of Wall Street. The stock would be valued higher (greed) if they just followed those Real Smart Guys on Wall Street.
After many painful years since the collapse, AboveNet is putting up some impressive results.
Double digit revenue increases, EBITDA margins at 44% and strong cash flows. How did they do it? By going back to their roots and simplifying the business model. They are in an enviable position, and knowing Bill as I do, you will continue to see consistent growth. Owning local fiber optics, also gives them a low cost base of leverage for higher margins and returns. ILEC dependency … near zero.
But to be honest with my readers, Bill may just turn my life into a living hell. Up until this resurgence of AboveNet, we would benchmark our performance numbers for the Board/Investors against what we considered the gold standard of metropolitan fiber-owned Telecom, Time Warner Telecom (known today as TW Telecom). We have been doing quite well in comparison. Now, here comes along these numbers from Bill, and finally an apples-to-apples value proposition on a focused metro fiber connectivity model around data and IP. I just can’t wait for the next Board meeting … thanks Bill.
Bill, I am up for the challenge. Different markets, granted, but you are now our new standard of excellence to benchmark. I wish you well my friend on future prosperity and continued connectivity!
By the way, those of you that believe AboveNet is a quick flip, and up for sale since they have cleaned-up well and been listed on the NYSE, you need to read the 10-K filing. Bill just extended the corporate headquarters lease in White Plains for another ten years … it tells me they plan on being around for awhile.
What’s not to like about this business model? It has metropolitan fiber ownership and lots of it; data connectivity, IP peering, a focus on reliable service and a great Leader. Bandwidth demand and connectivity of 100 megabit plus circuits and waves are going through the roof driven by wireless and wire line data applications along with the ever increasing video distribution needs.
Yahtzee!
Written by Dave Rusin - Telecom Executive
Loading ...Comments
One Response to “Fishing For LaPerch”
Got something to say?
Feeds
Dave,
Thank you very much for the nice recognition. We indeed share similar views of the value of last mile fiber and the need for big bandwidth connections. I would be remiss if i didn’t recognize the other great asset we have which is the great team of supporting characters that work with me every day. I am fortunate to be thier leader and collectively we are responsible for our success.
Thanks again and i enjoy reading your blog.
Bill LaPerch
CEO
AboveNet