Level 3 Losing Money Slashing Costs - Core Business Up - But Stock Down Huge
Level 3 is in a tough market and the question is how will they deal. They were effective in cutting expenses but the stock is taking a pounding. The bright spots were the cost cutting and the Core Communications Services piece. Core Communication Services segment recorded revenues of $964 million, a rise of 6% from $909 million in the third quarter of 2007.
Level 3 Communications Inc. reported a loss for the third quarter that narrowed from last year, benefiting from lower expenses during the period. Level 3 also said it lowered its outlook for revenue growth in Core communications services and narrowed guidance for adjusted EBITDA, for the fiscal year.
The stock is currently trading down almost 39%. The communications services provider posted a third quarter net loss of $120 million or $0.08 per share, compared to a loss of $174 million or $0.11 per share in the same period last year.
On average, 14 analysts polled by First Call/Thomson Financial expected the company to report a net loss of $0.09 per share for the third quarter.
Total revenues for the quarter were $1.07 billion, up from $1.06 billion recorded in the prior-year quarter. Analysts anticipated revenues of $1.07 billion for the quarter.
Segment wise, Level 3’s Core Communication Services segment recorded revenues of $964 million, a rise of 6% from $909 million in the third quarter of 2007. Revenues from Core Network Services stood at $791 million, up around 5% from $756 million last year, while Wholesale Voice Services revenues rose 13% from prior year to $173 million.
Total costs and expenses were $1.06 billion, down from $1.12 billion a year ago.
Level 3 now expects a revenue growth of 7.5% in its Core Communications Services for the full year, compared to the initially expected growth in the range of 8% to 13%.
Additionally, Level 3 noted that it has recently completed several liability management transactions, reducing its outstanding maturities by $179 million, and reducing net cash interest expense by approximately $10 million on an annualized basis.