"However, there was still considerable overcapacity in worldwide networks, and results continued to lag expectations. The stock hit a low of 5 earlier this year before beginning to recover.

"The network is still built -- it connects 690 cities in 60 countries around the world -- and it appears that the revenues are finally beginning to come.

"Over the last three fiscal years revenues grew from $1.87 billion in 2006 to $2.26 billion in 2007 to $2.59 billion in 2008. Despite the downturn in the worldwide economy, revenues in the first half of 2009 are only down slightly from 2008.

"It appears that the tremendous growth in data, voice and video traffic is finally beginning to fill up some of the capacity in worldwide networks. The company has also developed a successful marketing strategy focusing on mid-sized to large companies with far flung operations.

"Since much of the cost of the business is fixed (and incurred years ago when the cables were first laid), a large part of any increase in revenues will drop straight to the bottom line.

"In addition, Global Crossing has been able to cut its overhead over the last few years, further increasing operating profits.

"Because the company is still depreciating many of its assets for book purposes, it may continue to show net losses for a while. However, it is now generating free cash flow for the first time in its history.

"Even though Global Crossing reduced its leverage significantly through the Chapter 11 filing, there is still a fair amount of debt on the balance sheet. But it has no significant debt maturities for several years, and if current trends continue, it should have no trouble refinancing that debt.

"We're not the only ones who are attracted to the value in Global Crossing's network. Singapore Technologies Telemedia, which has a reputation as a very well run company, owns more than half of the Global Crossing stock.

"We think the current stock price gives you the opportunity to buy into a very valuable communications network at a tiny fraction of its original cost and at a time when the potential of that network is finally beginning to be fulfilled.

"We recommend buying up to 17. We note that accounts managed by an affiliate of the publisher of The Turnaround Letter own Global Crossing stock."

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