Level 3 (Nasdaq: LVLT) saw continued revenue declines in Q4 2010, but remains upbeat about Core Services revenue

Level 3 Communications (Nasdaq: LVLT) may have struck a recent deal to provide Internet backbone services to online movie giant Netflix (Nasdaq: NFLX), but that wasn't enough to lift the service provider's Q4 2010 results.

Instead, it was yet another quarter where the competitive carrier saw sales decline from $924 million in Q4 2009 to $921 million.

Although Level 3's results were on target with analysts polled by Thomson Reuters I/B/E/S, Wall Street investors thought its new contract with Netflix would have raised sales. However, Level 3 won't start seeing sales from that deal until this year.

There were some bright spots during the quarter. While the Large Enterprise and Federal and Wholesale Voice segments remained flat in Q4, Level 3 did see gains in its Core Network Services, European, and Mid-Market segments.

Core Network Services revenue was $720 million in Q4, up 2 percent from $707 million in Q3 2010 and up 2 percent over the $706 million it reported in Q4 09. For the full year 2010, Core Network Services revenue was $2.83 billion, compared to $2.84 billion for the full year 2009.

European and Mid-Market revenues were also up during the quarter. During the quarter, European revenue grew 7 percent sequentially and 12 percent year-over-year, while Mid-Market revenues grew 3 percent from $147 million to $151 million.

Going forward, Level 3 expects continual growth in the Core Network services revenue for both Q1 and 2011 overall.

Sunit Patel, CFO of Level 3 said in the earnings release that "While fourth quarter is typically a seasonally strong quarter due to our Vyvx broadcast business, even with the typical drop in these revenues in the first quarter 2011, we expect Core Network Services revenue to grow slightly in the first quarter 2011."

Patel added that "for the full year 2011, we generally expect continued Core Network Services revenue sequential growth."

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

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