Level 3's (NYSE: LVLT) Q4 earnings benefited from strong core network sales in Q4 2011 as revenue rose to $1.58 billion, a figure that included $670 million from its acquisition of Global Crossing.
Core network services once again was the shining star in Level 3's portfolio, where sales rose 2.6 sequentially to $776 million and 7.9 percent year-over-year to $3 billion.
This earnings rise helped it narrow losses to $163 million, or 80 cents a share, down from the $207 million loss it reported in Q4 2010. Taking out a gain from the sale of its coal mining operations and costs related to the Global Crossing acquisition, the loss was 62 cents.
With the integration of Global Crossing well underway, Level 3 will no longer report Global Crossing's and its own earnings separately beginning in Q1 2012.
"The company finished 2011 on a strong note, with Level 3 growing both Core Network Services revenue and Adjusted EBITDA and stable performance from the Global Crossing standalone business," said James Crowe, CEO of Level 3. "In particular, GC Impsat's results showed strong quarterly and year-over-year growth. We are pleased with the progress we made over the course of the year, significantly expanding the scope of our business through the acquisition of Global Crossing, reducing leverage and positioning the company for the future."
Despite revenue declines in its UK Government division, Global Crossing's "Invest and Grow" revenue was flat sequentially and increased 3 percent year-over-year. However, Global Crossing reported that GC Impsat revenue increased 2 percent sequentially, and 9 percent year-over-year.
Besides core services and its Global Crossing unit, Level 3's wholesale group grew 5 percent sequentially to $160 million and its large enterprise and federal group grew 2 percent to $369 million. Meanwhile, its mid-market and Europe units grew 1 percent sequentially to $164 and $83 million, respectively.
In fiscal 2012, the service provider expects to grow expects to continue the growth in 2012 of its core network services revenue.
Sunit Patel, CFO of Level 3, said it expects "Adjusted EBITDA to grow 20 to 25 percent for the full year 2012 compared to the full year 2011," surpassing analyst estimates of EBITDA of $1.379 billion.
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