"Level 3 opened the day lower by 3.5% but then trended higher throughout the day to close with a loss of 0.65%. The loss was a result of a downgrade where the firm cited valuation and flat sales as the main concern. The two segments in question are EMEA and wholesales, as Davidson believes that Q4 sales will be disappointing.
Strangely enough, this downgrade comes one day after the company won a CDN services deal with Apple regarding software downloads. The deal is not as significant as the one with Akamai, but still important in establishing a relationship with Apple. Therefore, with a price/sales of 0.84, I don’t think sales are necessarily important; I believe margins will be the most watched metric. And since the Global Crossing deal, Level 3 has greatly improved its margins and has shown progress in many operating measures. Therefore, I disagree with the analyst’s outlook but agree that sales might be flat; I simply don’t think flat sales will matter."