Level 3 Communications Inc. on Tuesday said it met or exceeded its expectations for revenue in the first quarter, even as net losses more than doubled.
The Broomfield-based communications- network provider reported a net loss of $168 million, or 20 cents per share, on revenue of $1.27 billion for the first quarter. That was up from a net loss of $77 million, or 11 cents per share, for the same quarter last year.
Results for the latest quarter included a one-time gain of $27 million, or 3 cents per share, associated with $692 million in private debt-exchange offers completed in January.
The consensus estimate of analysts polled by Thomson Financial was for a loss of 24 cents per share.
Level 3 attributed much of the revenue growth to a full quarter of results from WilTel Communications Group LLC, which it acquired last year, along with surprisingly strong growth in core communication services such as voice.
“Growth in our core services was stronger than we expected. Other communications services did not decline as quickly as we expected, and new sales were very strong. The pricing environment remains stable,” chief operating officer Kevin O’Hara said.
Level 3 acquired Tulsa, Okla.-based WilTel from Leucadia National Corp. for $486 million in cash and 115 million shares of common stock worth about $339 million. WilTel is just part of Level 3’s recent buying spree.
In January, it said it was buying regional wholesale network-services firm Progress Telecom LLC for $137 million split evenly between cash and unregistered shares of Level 3 common stock. That purchase closed March 20.
It expects its purchase of Englewood-based ICG Communications Inc., a sale announced this month for $163 million in cash and stock, to close at midyear.
Chief executive James Crowe said the Progress Telecom and ICG acquisitions provided an added benefit of their sales forces.
He declined to comment Tuesday on other possible acquisition targets.
Janco Partners analyst Donna Jaegers said she expects Level 3 to continue to increase its financial forecasts.
Shares of Level 3 shares closed at $5.32, up 40 cents.
Lack of layoff talk is news to analysts
Greenwood Village telecommunication analyst Donna Jaegers said Monday that she expected Level 3 to announce in its first-quarter earnings call that it would lay off workers in connection with its recent purchase of two other companies. But company executives did not discuss layoffs in the Tuesday call.
Instead, the telecommunications network operator may be “changing its stripes” in a volatile, rapidly changing telecommunication industry by keeping more employees in the purchased companies than analysts expected, Jaegers said Tuesday.
Traditionally, telecom companies, when they made acquisitions, have merged sales forces and laid off most remaining workers, Jaegers said. But that may not hold true with Level 3’s recent acquisitions, she said.
– Beth Potter
