XO's (XOHO.OB) Q1 earnings, similar to its Q4 09 results, illustrated that the economic crisis that affected businesses throughout 2009 is in a hangover period.
As a result of the still staggering economy, XO reported a net loss of $16.6 million, which was $12.1 million above the $4.5 million net loss it saw in Q1 09. At the same time, company revenue declined $8.3 million to $369.5 million.
Not everything was doom and gloom for XO in Q1, however. Much like Q4 09, the star of XO's service show was IP-based service. A growing demand for its IP VPN, IP Flex, Ethernet and Dedicated Internet Access (DIA) broadband service products generated $209.8 million in revenue for the CLEC. Not surprisingly, migration from TDM to IP came with the price of declining legacy voice services--a common trend seen in both the competitive and incumbent service provider segments. In Q1, XO's legacy voice service declined by $10.8 million.
Along with seeing growing demand for IP services, XO completed its 40 Gbps network upgrade and expanded its international reach into both Europe and Latin America. Seeing increasing demand from international carriers to get access into Latin America, XO lit up a fourth gateway on the U.S.-Mexico border in McAllen, Texas. In addition, XO struck a partnership with Hibernia Atlantic to provide one another with connectivity in the U.S. and Europe.
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