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Optical/IP

Corvis Gets Ready to Pounce

Has Corvis Corp. (Nasdaq: CORV) got enough of a war chest to outbid Qwest Communications International Inc. (NYSE: Q) for the assets of Allegiance Telecom Inc? (See Corvis to Sell $300M in Notes.)

That's the talk on the street, as wacky as it sounds. The question hangs in the air, as Corvis Corp., the owner of Austin, Texas-based carrier Broadwing Inc., announced it is raising up to $300 million by selling convertible notes to several investors. The investors involved won't be disclosed until the Securities and Exchange Commission (SEC) paperwork is filed later this week.

Corvis has dropped plenty of hints lately that it is in a buying mood. But this time the company will likely avoid fishy acquisitions in favor of substantially adding to its business (see Corvis Dorsal Deal: A Huber Spin-In?). Excluding the note offering, Corvis has more than $300 million in cash and investments, and it recently added an M&A executive to its staff (see Huber's OCG on Ice ).

Earlier, Qwest said it would buy Allegiance Telecom Inc.'s assets for $300 million in cash plus $90 million in convertible debt. But the courts are allowing higher bids, since Allegiance is under Chapter 11 bankruptcy protection, and Qwest, probably anticipating a bidding war, has been steadily raising funds since its announcement. The bids are due today, and the court will announce the winner on Thursday.

Corvis has consistently been rumored to be involved in the bid for Allegiance. "We believe other bidders, potentially Corvis Corp./Broadwing and XO Communications Inc. (OTC: XOXO), among others, could trump Qwest and offer a better outcome for stakeholders," writes Needham & Co. analyst Vik Grover in a note to clients this morning.

But getting Allegiance may not be possible for Corvis. As of November, Qwest had more than $6 billion in cash and investments, giving it a considerable advantage. "It's tough when Qwest steps in, because Qwest has a lot of money," says James Breen, an analyst with Thomas Weisel Partners.

Corvis wants Allegiance -- or some similar assets such as those held by Focal Communications Corp. (Nasdaq: FCOM) or ICG Communications Inc. (Nasdaq/Frankfurt: ICGX), sources close to the company say. It wants to save between $3 million and $6 million a month in access or local loop charges it has to pay other carriers for terminating the long-distance voice and data traffic that traverses its core transport and switching network. It can do this by owning facilities that shorten the distance between Broadwing's hubs and its customers.

Andy Backman, Corvis's VP of investor and public relations, says Corvis can't comment specifically on Allegiance. He says the company's fundraising shows it has staying power in the market and will fund its rollout of new services, as well as any acquisitions that make sense. He says the purpose of any acquisition would be, not just to trim Broadwing's access costs, but to increase its market presence and to add customers.

Corvis shares climbed $0.09 (3.80%) to $2.46 in trading on Monday, a 246 percent improvement from its year-ago share price. After hours, its shares fell $0.02 (0.81%) to $2.44. The company, which reports earnings for its fourth quarter and full year 2003 on Thursday, is expected to lose about 9 cents a share on revenues of about $140 million, according to analysts surveyed by Reuters Research.

— Phil Harvey, News Editor, Light Reading

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fw23 12/5/2012 | 2:29:08 AM
re: Corvis Gets Ready to Pounce
You have part of the story right, but the bigger
story is that this fight over alligence could
escallate into an all-out takeover battle between
Dorsal/Corvis/Broadwing and Qwest itself.

The dealings between these two companies run
deep. The guys in the trenches at qwest KNOW
the value of an OPTICAL network through past
dealings with Corvis. The smokestack industralists
running Qwest at the moment don't get it, but
the guys who push the iron do.

If Qwest goes too hard after Alligence, Corvis
could do an end-run around and make a bid for
the whole of Qwest. With the debt and a
rapidly rising stockprice, its not anymore
unlikely than Qwest swallowing USWest years
ago.

Interest rates are low. And the debt service
for the LBO could come out of the operational
savings Qwest would have after they deploy
a broadwing-style ALL-OPTICAL network.

Dr. Huber is known for his BIG MOVES. Nobody
saw DORSAL coming. Nobody understood BROADWING
until it was too late. Corvis is like a big
tiger hiding in the weeds. We know that its
going to pounce, but we dont know which way
yet.
Dr. Dolby 12/5/2012 | 2:29:07 AM
re: Corvis Gets Ready to Pounce That was pretty dumb whoever fw23 is.


corvisoricle 12/5/2012 | 2:29:06 AM
re: Corvis Gets Ready to Pounce "Dr. Huber is known for his BIG MOVES. Nobody
saw DORSAL coming. Nobody understood BROADWING
until it was too late. Corvis is like a big
tiger hiding in the weeds. We know that its
going to pounce, but we dont know which way
yet."

------------------

That was my favorite part of your post. Obviously there are a few foolish Huber haters out there.
They will pay the price of lost profits of not owning the stock.
ATMRules 12/5/2012 | 2:29:06 AM
re: Corvis Gets Ready to Pounce fw23=Retard...you fw23 are just a plain old retard, go back to sleep where you belong...all your base belong to us.....


ATMRules

P.S. fw23 is a retard.......
testdude 12/5/2012 | 2:29:03 AM
re: Corvis Gets Ready to Pounce OK LR, I think its time you take a serious look at removing this FW23 guy the same way you did BobbyMax.

He has the same simple minded, out to lunch posting's BoobyMax did. Except he has a spell checker and loves to use his CAPS LOCK key.

Please remove him. He's really starting to irritate other serious posters
road__runner 12/5/2012 | 2:29:03 AM
re: Corvis Gets Ready to Pounce fw23 = bobbymax = harveymudd = lr.

Whenever you see an outrageously opinionated poster you can be sure its the LR boys up to their old tricks.

Just ignore him and see how he quietly disappears.
corvo 12/5/2012 | 2:28:57 AM
re: Corvis Gets Ready to Pounce fw

i've been a corvis long all these years and still believe in the corvis dream. technology, such as that with corv, if wasted, means a loss for us shareholders and also for the u.s.. it is technological prowess , such as the one exemplified by corvis, that has placed the u.s. at the top of the world. i also agree that corvis' purchase of brw was a brillint move in as far as it produces some revenue and gives corv the opportunity to showcase its all optical network. all in all it seemed that corv was making prudent moves under difficult circumstances - difficult not only for corvis but for the whole industry. but now i hear these warcries, taking over q or buying allegiance. is this really necessary or is it the right moment to embark on these initiatives? from zero debt it risks becoming a highly indebted company. one false step by the american economy and we risk ending up in a lot more trouble than we could handle. i think the best approach at the moment is to make the already existing assets produce better returns.
optical_man 12/5/2012 | 2:28:55 AM
re: Corvis Gets Ready to Pounce I'm not the smartest one her (by far), but I'll be damned if this isn't fw23 trying to act "calm". Even down to a new employee of Corvis saying "i've been a corvis long all these years...."
The subtlety is overwhelmi.....no, looking at it, it's not.
Nice try though. Ya gotta give the guy credit. It's not easy to get access to the internet from Texas State Mental Health facilities. Especially from the 'lock-down' ward.

"fw

i've been a corvis long all these years and still believe in the corvis dream. technology, such as that with corv, if wasted, means a loss for us shareholders and also for the u.s.. it is technological prowess , such as the one exemplified by corvis, that has placed the u.s. at the top of the world. i also agree that corvis' purchase of brw was a brillint move in as far as it produces some revenue and gives corv the opportunity to showcase its all optical network. all in all it seemed that corv was making prudent moves under difficult circumstances - difficult not only for corvis but for the whole industry. but now i hear these warcries, taking over q or buying allegiance. is this really necessary or is it the right moment to embark on these initiatives? from zero debt it risks becoming a highly indebted company. one false step by the american economy and we risk ending up in a lot more trouble than we could handle. i think the best approach at the moment is to make the already existing assets produce better returns."
ksig25 12/5/2012 | 2:28:53 AM
re: Corvis Gets Ready to Pounce Guys, if you want some real laughs, go check out the "Huber's OCG on Ice" article as well as the Corvis board. This moron thinks the following...1) Corvis is building a top secret optical network for "Rumsfeld and the boys at the Pentagon" that no one knows about. 2) Huber is going to build rockets so he can deploy "trans-atmospheric networks." TRANS-ATMOSPHERIC NETWORKS!! (If that doesn't scream loony-bin, nothing does) 3) Huber will be networking the international space station (to what, we have no idea!) 4) That Dorsal has technology out in the field, in use (too bad they don't even have a field-tested prototype.) 5) Now he thinks Corvis is going to buy Qwest.....what a moron.

ksig25
Physical_Layer 12/5/2012 | 2:28:53 AM
re: Corvis Gets Ready to Pounce Geez you guys are harsh. Maybe I didn't do enough homework but I read the fw23 post below and I didn't think it was anything *remotely* close to the crap that BobbyMax spew out onto the keyboard.

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