Level 3 Communications Swings To Q4 Profit, Shares Up 8% - Update

(RTTNews) - Level 3 Communications Inc. (LVLT) Wednesday reported a swing to profit in the fourth quarter from a loss last year, helped primarily by lower expenses and strong margins that erased a marginal drop in revenues. Both earnings and revenues for the quarter came in well ahead of Wall Street expectations, sending Level 3 shares surging a near 8 percent on the New York Stock Exchange.

The Broomfield, Colorado-based company reported a fourth-quarter profit of $14 million or $0.06 per share, compared to a loss of $56 million or $0.26 per share a year ago. Thirteen analysts polled by Thomson Reuters expected earnings of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

Level 3 said its revenues for the fourth quarter inched down 0.7 percent to $1.60 billion from $1.61 billion last year. Nevertheless, revenue for the quarter beat analysts revenue consensus of $1.59 billion.

Fourth-quarter gross margin, or gross profit as a percentage of revenues, improved to 61.4 percent from 59.4 percent last year. Selling, general and administrative costs dropped to $561 million from $585 million a year ago.

Core Network Services or CNS revenue was $1.443 billion in the fourth quarter 2013, increasing 4.1 percent year-over-year on a constant currency basis.

At its key core network services division, revenues grew 3.7 percent to $1.44 billion, as North America sales rose 4.7 percent, Latin American sales increased 6 percent, while EMEA slipped 2.2 percent.

"We had a strong finish to 2013 as our fourth quarter revenue benefited from both underlying growth and seasonal strength," said Jeff Storey, president and CEO of Level 3.

For the first quarter of 2014, the company expects CNS revenue to be roughly flat on a sequential basis, due to the typical reversal in seasonally strong fourth quarter revenue offset by continued underlying growth.

For full year 2014, the company expects CNS revenue growth to be above the 2.9 percent growth recorded in 2013, on a constant currency basis.

LVLT is trading at $34.83, up $2.42 or 7.70%, on a volume of 1.97 million shares.