Warren Buffett puts bet on Level 3.Byline: From news service and Register-Guard reports Billionaire Warren Buffett Warren Buffett Known as "the Oracle of Omaha," Buffett is Chairman of Berkshire Hathaway and arguably the greatest investor of all time. His wealth fluctuates with the performance of the market, but for the last few years he has been reported to be worth over $30 billion, making and two other investors have agreed to invest a total of $500 million in Level 3 Communications
Level 3 Communications NASDAQ: LVLT is a communications and information services company headquartered in Broomfield, Colorado, USA. Inc. to help it fund acquisitions as the telecommunications industry consolidates. Shares of Broomfield, Colo.-based Level 3 climbed 50.9 percent, or $1.47 a share, to close Monday at $4.36 on the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. . ``Any time the Buffett name or Berkshire Hathaway Berkshire Hathaway (NYSE: BRKA, NYSE: BRKB) is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. gets involved, stock trades up a bit,'' said Rick Grubbs, senior telecom analyst at Credit Lyonnais. ``The bottom line is, this doesn't change the business. It remains to be seen what (Level 3 executives) do with the money.'' The new investment by Buffett signaled a bet that Level 3 would survive an expected round of consolidation among telecom players. Level 3 chief executive Jim Crowe made it clear he would use most of the money for acquisitions. ``We believe the consolidation opportunity in our industry, that is the opportunity to acquire customer bases that we can move to our network platform, is at an extremely high level, maybe a historically high level,'' Crowe told investors in a conference call. Level 3 has built a 20,000-mile fiber optic network around the world, serving customers such as the regional Bell carriers, Internet service providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. and cable TV companies. Level 3's latest acqusition took place late last month, with the purchase of Texas-based Software Spectrum Inc., a software distributor and customer service provider, for $122 million. Software Spectrum is opening a customer service center in downtown Eugene and seeking to hire 230 to 300 people by the anticipated July 29 opening. Software Spectrum is using the call center to provide customer support for software maker Symantec Corp. Symantec earlier this year announced its center in Springfield's Gateway area was outsourcing that work to Software Spectrum and firing 270 workers. When Level 3 in early May announced its plan to buy Software Spectrum, Crowe said he was acquiring the revenue-rich company to satisfy covenants with lenders that require debt-burdened Level 3 to maintain certain revenue levels. With regard to the new cash infusion for Level 3, Legg Mason Founded in 1899, Legg Mason, Inc. (NYSE: LM) is a leading Global Asset Management Firm that serves the institutional, mutual fund and wealth management markets. The firm is headquartered in Baltimore, Maryland, and is located on Lombard and Charles Streets in the Legg Mason Inc. and Buffett's Berkshire Hathaway Inc. each agreed to buy $100 million and Longleaf Partners Funds agreed to buy $300 million in notes that will mature in 10 years and pay 9 percent cash interest. The notes can be converted into stock at a price of $3.41 a share. Buffett had largely shunned Internet stocks Internet stock The equity security of a company engaged primarily in a business associated with the Internet. Also called dot-com. while others rode the dot-com boom See dot-com bubble. , building a portfolio on insurance and companies such as Coca-Cola Co. and owning shoe companies, furniture stores and the International Dairy Queen Dairy Queen (also known as DQ) is an ice-cream shop and fast-food restaurant franchise based in the United States and founded in 1940. For many years the franchise's slogan was "We treat you right!" In recent years, it has been changed to "DQ something different. restaurant chain. ``Liquid resources and strong financial backing are scarce and valuable assets in today's telecommunications world. Level 3 has both,'' Buffett said in a news release. Crowe said all parties wanted to structure an equity investment but were thwarted by legal technicalities. Level 3 was founded as a subsidiary of Omaha-based construction giant Peter Kiewit Sons' Inc. Kiewit chairman emeritus Walter Scott Jr. is chairman of Level 3 and is one of seven people on Berkshire's board. Several months ago, Scott, Crowe and Buffett, the chairman of Berkshire Hathaway, discussed an investment in Level 3, Crowe said. Buffett encouraged Level 3 to seek a lead investor and mentioned Mason Hawkins Otis "Mason" Hawkins (born March 10, 1948) is a noted value investor. In 1975 he founded Southeastern Asset Management, which as of year-end 2006 managed $39.8 billion on behalf of both institutional and retail investors. , head of Longleaf adviser Southeastern Asset Management. Several telecom companies have suffered while waiting for demand to catch up to a glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. of fiber-optic capacity they built while taking on billions of dollars of debt. Level 3 has roughly $6.4 billion in debt. Bill Miller, chief executive of Legg Mason Funds Management, said: ``Spending on communications services is nondiscretionary. We believe more strongly than ever that Level 3 is emerging as one of the ultimate leaders, survivors and consolidators in the industry.'' Crowe said any acquisition target would have to be able to integrate smoothly into Level 3 and suggested that companies headed toward bankruptcy would be attractive. He declined to elaborate. CAPTION(S): MORE TECH INSIDE ELECTRONICS Hiawatha Bray ‘’‘Hiawatha Bray’’’ is a technology columnist for the ’’Boston Globe’’. Born in Chicago, he started as a reporter and managing editor for ’‘Computerpeople Weekly’’. on a cheap PC / 2B GADGETS Use your spare cell phone minutes on your home phone / 2B COMPUTERS Bill Husted on protecting your computer / 2B |
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