Global Crossing Keeps Spending, Much to Analysts' Delight - TheStreet

Global Crossing Keeps Spending, Much to Analysts' Delight

The stock was off 6%, but analysts said the company remains on the right track.
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Global Crossing

(GBLX)

Monday agreed to acquire

Racal Telecom

of Britain for 1 billion pounds ($1.65 billion), continuing its recent shopping spree and delighting analysts.

Shares of Global opened at 34, off 2 1/2 from Friday's close, and at midday were off 2, or 5.5%, at 34 1/2.

Global's mission to build a worldwide fiber optic network has made it one of the industry's most prodigious acquirers. The Hamilton, Bermuda-based company, which went public just over a year ago, recently closed its acquisition of Rochester, N.Y.-based telecom provider

Frontier

for $10 billion in stock.

The Racal purchase adds 4,536 miles of cable wires running alongside railway lines, connecting 2,200 towns in Britain, according to a report on the deal from recent Global Crossing underwriter

Salomon Smith Barney

. Solly's Jack Grubman, who rates the stock a buy, called the buy "hugely positive" for Global.

Grubman particularly likes Racal's focus on engineering. The unit of

Racal Electronics

employs 600 engineers and a sales force of 200. Racal caters mainly to government and transportation industry customers.

Global's brisk acquisition pace has been possible because the company is not constricted by

FCC

rules that apply to regional Bell carriers. The company is rushing to build its network, gaining customers almost as an afterthought for now, said Peter Treadway, an analyst for

Ryan Beck

who rates Global Crossing strong buy. He said the purchase makes "tremendous strategic sense." (Ryan Beck hasn't underwritten for Global Crossing.)

"It's great to have all this wire running through town," Treadway said. "They will have to load customers onto that."

The purchase "represents an exceptional opportunity to accelerate our development of the world's first global independent telecommunications company," said Bob Annunziata, Global CEO, in a news release.

Goldman Sachs advised Global on the deal.