DENVER—Level 3 Communications Inc., an Internet network operator that has struggled of late, said Wednesday it narrowed its first-quarter loss as it benefited from rising consumer demand for online video services.
The company based in suburban Broomfield also said it has made improvements in both installation and service activation, areas that had created a backlog in recent months. The company reiterated its 2008 guidance.
Level 3’s stock closed up nearly 23 percent in Wednesday trading.
During a conference call with analysts, Chief Executive Officer James Crowe said he believes Level 3 is well positioned to take advantage of the growing demand for Internet content that can be streamed or downloaded to computers and wireless devices.
“We benefit directly from those trends since we are a leading provider of both the connections to the Internet for the owners of content at one end and for the broadband network which consumers utilize at the other,” he said.
For the quarter that ended March 31, Level 3 reported a net loss of $181 million, or 12 cents per share, compared with a loss of $647 million, or 44 cents per share, in the first quarter of 2007. Revenue rose 3 percent to $1.09 billion from $1.06 billion.
Its core network services revenue rose 8 percent to $774 million. Wholesale voice services climbed 23 percent to $184 million, attributed to growth in conferencing, cable and wireless business.
The increases were offset by a 39 percent decline in other communications services to $51 million, reflecting an anticipated drop in managed modem services.
Level 3 has struggled to integrate complex provisioning systems from at least seven companies it acquired in recent years. Provisioning encompasses the transaction from a sales order to service activation.
The results were released a little more than a month after Level 3 co-founder Kevin O’Hara resigned as president and chief operating officer. He was largely responsible for the areas where Level 3 was having difficulties.
For 2008, Level 3 reiterated its guidance of an 8 percent to 13 percent increase in core communications revenue and an increase in adjusted earnings before taxes, interest, depreciation and amortization from $950 million to $1.1 billion.
Janco Partners analyst Donna Jaegers said Level 3 benefited from tight expense control and improvement in the provisioning systems. “I think they showed that they turned a corner operationally,” she said.
Shares of Level 3 closed up 54 cents, or 22.8 percent, to $2.91 a share Tuesday.
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