first time poster here, I've been in the telecom industry a long time and am struggling to understand what folks are seeing in CCOI that is making them sell off (and personally have been buying more as it goes down) for the following reasons:
1) I think folks are confusing revenue for free cash flow, revenue has dropped as some inherently crappy (low/negative margin) customers are jettisoned from the sprint takeover.
2) wave revenue is up 90% year over year, this should be nearly all very high margin as it is on the owned network inherited from from sprint, the only costs are cards.
3) folks got spooked when the CEO lost most of his stake in the company by pledging his stock on margin debt to fund real-estate unrelated to the company. I view this as a screw up but honestly something that just freaks folks out but is unrelated to the operations of cogent.
4) they just sold some datacenters for $225 million (cost basis essentially zero) that should go right to the debt line and cut \~10% of their debt, the deal is closed so i would expect this to be reflected in their next earnings cycle. I suspect they have enough facilities to do something similar at least once or twice more given the number of sites they got from sprint.
As a side note, in my PE telecom experience we often would acquire companies and not worry about killing the crappy products that were loosing money (if we could kill their cogs too) as long as we were driving up EBITDA and it seems to me that the market is missing that this is what CCOI seems to be doing with the sprint acquisition.
Curious what folks think. Am i crazy for thinking this is a good buy?