Exhibit 99.1
[LOGO]
FOR IMMEDIATE RELEASE
Level 3 Contacts:
News Media: Josh Howell Investors: Robin Miller
720/888-2517 720/888-2500
Steve Ingish
720/888-2521
OPEN LETTER TO LEVEL 3 STOCKHOLDERS
BROOMFIELD, COLORADO - November 7, 2000. The following open letter to
stockholders was released today by James Q. Crowe, CEO of Level 3
Communications, Inc. (Nasdaq: LVLT).
"Dear Fellow Stockholders:
"We are witnessing a period of fundamental and unprecedented change in the
telecommunications industry. The large, traditional industry players are
restructuring into smaller operating companies in order to focus on different
segments of the market. From our perspective, these actions are not surprising.
In fact, they were inevitable. Given the pace of market and technical change, it
is difficult enough to be good at one thing. It is extraordinarily difficult,
perhaps impossible, to be good at many things - operating on the old telephone
business model as a large, vertically integrated company trying to serve all
segments of the market.
"History has shown, that in periods of economic discontinuity, dominant
companies rarely if ever remain dominant. Rather, newer competitors emerge and
create significant value.
"We saw this same transition occur in computing. In the 1980's, IBM was an icon
of global business success. It was vertically integrated, making everything from
hardware to software. And then it was challenged by focused, horizontally
integrated companies like Microsoft and Intel. These firms captured dominant
market shares in their market segments and, in the process, created enormous
value for investors.
"As the communications industry goes through a similar evolution, we will see
companies struggle to redefine and reposition themselves. Until the winners and
losers in this process become apparent, investors may see continued stock price
volatility across the industry and even across the board reductions in
valuations.
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"Therefore, we believe the right question to ask is, 'What companies will emerge
with the right business plan, sufficient capital and the right team of people?'
Those who are well positioned, with access to capital, will have tremendous
opportunities. Those who don't will struggle.
"We continue to believe that we are exceptionally well positioned, and we
continue to believe that we are at the threshold of one of the great
opportunities in business.
"I would like to comment on our progress and position, and I would like to
respond to some of the questions we have received from you as fellow
stockholders. Not surprisingly, most of your questions have centered on our
recent stock weakness.
"As a general matter, I avoid commenting on short-term movements in the capital
markets and in Level 3's stock price. However, in view of the magnitude of the
price drops we have seen recently and your understandable level of concern, I
feel I owe it to you to address these issues directly.
"I understand these concerns personally since my financial success, that of all
Level 3's executive team and that of our employee-owners is tied directly to
Level 3 stock performance. And I assure you that we are not happy about current
stock performance.
"Based on the inquiries we have received, there may be confusion about our
recent financial results, the implications of these results and some projections
we have made. If so, I believe that clarifying our position may be of some
value.
"Through the third quarter of this year, our capital expenditures have been $4.5
billion. We expect to spend $6.3 billion on capital goods through the end of
2000. These figures both represent increases in the amounts we expected to spend
at the beginning of the year.
"We also indicated that, even with the increase in capital expenditure, we were
not projecting an increase in total investment required to achieve cashflow
breakeven.
"At the time we made these announcements, we also estimated that communications
revenue for this year would increase to $825 million versus the previous
projection of $750 million. This means that communications revenue for the
fourth quarter is expected to be approximately $320 million, which is a growth
rate of 25% quarter over quarter. We are very comfortable with this estimate and
confident we will meet the expectation. We further indicated that we would
update our 2001 revenue projection, which stands at $1.7 billion - a more than
100% increase over the current 2000 projections -- after our 2001 budget
reviews, which occur this quarter.
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"In apparent response to these statements, a number of investors and analysts
have asked a series of related questions, which may be summarized as follows:
'Given recent revenue and earnings disappointments experienced by a number of
other communications companies, should investors be concerned that you have
increased your 2000 capital expenditures, and not increased your 2001 revenue
projections?'
"My answer is that we remain confident in our ability to earn a superior return
on our invested capital. The reason we have not updated 2001 revenue projections
is not concern over 2001 performance, it is our longstanding commitment to
provide the best, most thoughtful guidance that we can. This will be best
accomplished by doing so after we get the benefit of our previously mentioned
budget process.
"We have raised almost $14 billion and invested in people, network
infrastructure and operational capability very different from those of our
competitors. Important parts of our US, European, Asian and undersea
infrastructure will be completed in the very near term, on or ahead of schedule.
"We continue to believe that we have the right operational, financial and
technical plans to capitalize on one of the great opportunities in business
today. We believe that we have built the most advanced communications network in
the world and, more importantly, one that continues to advance as technology
advances.
"Overall, I am more confident than ever in our position. We remain on track, and
in many cases ahead of schedule. We will substantially complete construction of
our network this quarter and have begun migrating customers onto our network. We
are in the enviable position of being substantially prefunded to free cashflow
breakeven in accordance with our business plan. We have capital in the bank at a
time when many of our competitors are capital constrained, because the capital
markets are constrained. We will work hard to preserve this substantial
competitive advantage and we will be very carefully analyzing and monitoring our
capital deployment.
"In conclusion, many of the industry events that we had envisioned over the last
few years have, in fact, occurred. We believe that the assets we have created --
and the team we have built - position us exceptionally well going forward. We
remain firmly committed to delivering exceptional value to you, our fellow
stockholders, and appreciate your trust and continuing support."
About Level 3 Communications
Level 3 (Nasdaq:LVLT) is a global communications and information services
company offering a wide selection of IP-based services including broadband
transport, colocation services, submarine transmission services and the
industry's first Softswitch based services. Level 3 offers services primarily to
IP intensive companies, which deliver their services over the Level 3 Network.
Its Web address is www.Level3.com.
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Forward Looking Statement
The statements made by Level 3 in this press release may be forward looking in
nature. Actual results may differ materially from those projected in
forward-looking statements. Level 3 believes that its primary risk factors
include, but are not limited to: substantial capital requirements; development
of effective internal processes and systems; the ability to attract and retain
high quality employees; changes in the overall economy; technology; the number
and size of competitors in its markets; law and regulatory policy; and the mix
of products and services offered in its target markets. Additional information
concerning these and other potential important factors can be found within Level
3's filings with the U.S. Securities and Exchange Commission. Statements in this
release should be evaluated in light of these important factors.
