Level 3 gets boost from core network services in Q1 2011; forecasts Q2 growth

Level 3 (Nasdaq: LVLT) reported something different in Q1: an actual profit and a Q2 revenue outlook that drove up its shares 4 percent.

During the quarter, Level 3 reported consolidated revenue of $929 million for the first quarter 2011, compared to consolidated revenue of $921 million for the fourth quarter 2010 and $910 million for the first quarter 2010.

Sunit Patel, Level 3's CFO, said he expects "the sequential growth in Core Network Services Revenue to strengthen in the second quarter."

Overall, Level 3's Q1 total communications revenue was $914 million, up from $904 million in Q4 2010 and $900 million in Q1 2010.
The growth stars during the quarter were mid-market and core network services, which both rose 3 and 1 percent to $155 million and $729 million from Q4 2010, respectively.

From a 2011 year total perspective, Level 3 forecasts capex to be about 12 percent of communications revenue, which accounted for 98 percent of the total revenue during the first quarter.

Of course, as Level 3 moves forward with its acquisition of competitor Global Crossing (Nasdaq: GLBC), it will experience network and back office integration costs that come with any large acquisition.

"With respect to the Global Crossing acquisition, we expect to incur some integration planning- and transaction-related costs between signing and closing, and will separately disclose those in our quarterly results," said Patel.

Global Crossing itself reported a 56 cents per share loss with $661 million in revenue, lower than analyst forecasts of a loss of 71 cents per share, on revenue of $681.9 million.

For more:
- see the earnings release (PDF)
- Reuters has this article

Special Report: Wireline in the first quarter of 2011

Related articles:
Jeff Storey, COO of Level 3 on its Global Crossing acquisition and increasing its enterprise service focus
Level 3 to acquire Global Crossing to scale global reach, video service capabilities
Level 3 saw continued revenue declines in Q4 2010, but remains upbeat about Core Services revenue

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