Stay focused on telecom

Global Crossing Limited (NASDAQ: GLBC), Time Warner Telecom (NASDAQ: TWTC) and Level 3 Communications Inc (NASDAQ: LVLT), had one heck of a rally the past few day, despite horrific market conditions.

Both Global Crossing and Time Warner Telecom reported very strong results. Global Crossing's stock is selling from $22, up from $17.50 earlier this week. Why? The international telecommunications service provider reported a 500 basis-point improvement in its gross margin. This is a company that had some of the lowest gross margins in the telecommunication sector a few years ago. EBITDA came in $4 million ahead of analysts expectations. A good sign for a company that has often missed financial targets.

Jefferies has EBITDA going from $144 million in 2007 to $388 million by 2010. The combination of better industry conditions and recent acquisitions bodes well for the once-bankrupt telecom provider.

Time Warner Telecom also reported strong results earlier this week and should be looked at.

Emerging telecommunications providers got hit pretty hard after Level 3's results came in lite. Level 3 said demand for its services was strong, but messed up getting new customers on the network. Investors were not sure to believe management. From the results of both Global Crossing and Time Warner Telecom, it appears the demand for service from these new service providers is most definitely strong.