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Optical/IP

Market Meltdown

3:45 PM -- What a rought few weeks it has been on Wall Street.

It's been a rollercoaster ride with the Dow Jones Industrial Average trading several hundred point losses with several hundred point gains on back-to-back days along with record trading volumes on both the New York Stock Exchange (NYSE) and the Nasdaq .

Most of the selloffs have come as a result of the subprime mortgage meltdown that has the credit markets spooked and investors trying to figure out whether it's the start of a bear market or just a big correction to the rally. Today, we're in the middle of what could be another 200 point selloff (down 220 points right now) as BNP Paribas announced that it was freezing three funds that invested in U.S. subprime mortages.

The announcement has investors seeing nothing but red across the board. In telecom however, there are a few brightspots scattered through what is otherwise a miserable day on Wall Street. Here are a few of them:

  • Vonage Holdings Corp. (NYSE: VG): I'm just as confused as you are that Vonage is batting leadoff in this list. But as I type this, the stock is up 9.55 percent on a day that every company is losing money. Of course, we're still talking about a stock that has lost something around 85 percent of its value since its IPO, so I haven't called my mommy to tell her the news just yet. But at least for today, investors are buying Jeffrey Citron and Co's optimism from this morning that the bad press from the Verizon Communications Inc. (NYSE: VZ) litigation will go away and the company's cost-cutting measures will bring the company to profitability. And he may be right. Analysts I've talked to about this have been saying that if the pricing on their service can remain stable -- which becomes more and more realistic as other VOIP providers like SunRocket bite the dust -- there is a chance that this company could be cashflow positive by next year. Then again, we could wake up tomorrow and find that the U.S. Appeals Court ruled in favor of Verizon, in which case you can forget everything I just said.

  • Global Crossing (Nasdaq: GLBC): Another company that provides VOIP services is up big on an otherwise down day! Will wonders never cease? Global Crossing, which provides VOIP and other IP-based services to enterprise customers, is trading up 8.29 percent today on the heals of becoming EBITDA positive once again. Back in the fourth quarter of 2006, the company had announced that it was EBITDA and cashflow positive for the first time ever. Last quarter, it momentarily went back into the red, and its stock tumbled around 40 percent as a result. But now the company is once again heading in a positive direction and the stock is on the rise.

  • Akamai Technologies Inc. (Nasdaq: AKAM): The largest CDN is up 3 percent. Maybe because it's not Limelight Networks Inc. (Nasdaq: LLNW). (See Limelight's Dim Q2.)

  • Level 3 Communications Inc. (NYSE: LVLT): Level 3 has been struggling to integrate its many recent acquisitions into its business, and the company's earnings have suffered recently as a result. (See Level 3 Feels Integration Irritation.) But yesterday the company said CEO James Q. Crowe will have surgery for a tumor on his pituitary gland, and the stock is now up 5 percent. Coincidence? I have no idea.

— Raymond McConville, Reporter, Light Reading

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