On The Insider: Who is Anne Hathaway Crushing On?

Level 3 Communications Q3 2007 Earnings Call Transcript

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2007-10-23 12:15:59.0

Tags: Level 3 Communications Inc.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question will come from the line of Mike McCormack with Bear Stearns. Please go ahead.

Mike McCormack - Bear Stearns

Hey, thanks Jim. Glad to hear your health is okay. Just a couple of questions on the provisioning process. Are you saying that process, having a negative impact or impairing any relationships that you guys have with key customers?

And secondly, I think it may be solely disingenuous to talk about integration synergy run rates. I am just trying to get a sense because clearly there is a huge offset by revenue dissynergies, can you quantify in any way the impact of provisioning on the revenue?

Jim Crowe

Kevin, do you want to take that first one? I'll take a shot at the second.

Kevin O'Hara

Sure. Mike, it has had some effect on customers, myself, and on most of the senior folks on the team have been spending an awful lot of time with customers, helping manage our way through their process.

The number one measure that you would look at in that regard is in terms of whether or not it's having a material effect is churn, has churn picked up, we don't see any measurable pick up in churn.

And sales remain strong through the summer, they were a little bit slower in September, but what we're assuming going forward is that our sales are going to wretch it back to be in line with our provisioning capability, as we set different expectations with customers.

To be specific in that regard, if a customer requests an order within a certain number of days, we are not generally accepting those orders unless the request to-date is within what we feel is our current provisioning interval.

So, in some cases -- in many cases, in fact, we're trying to set a different expectation with customers on the front-end. One that we can meet rather than simply taking an order based on their request and then disappointing after the fact.

We think that in the long run, that's a better way to manage the customer relationship, but it does create tension in the short-term.

Mike McCormack - Bear Stearns

Okay. Kevin, can you just give us a sense for what those provisioning times look like today versus six weeks ago, eight weeks ago?

Kevin O'Hara

Mike, they move all over the place, and then we spend a lot of time trying to figure out how to inform, how those processes are improving in a way that made sense rather than further confuse the issue, and the conclusion that we have reached is short of handing out a 100-page document.

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