Level 3 Communications, Inc. (Nasdaq: LVLT) posted a loss of 43 cents a share in its third quarter Friday, much better than the loss of 52 cents a share predicted by First Call. The maker of said U.S. and European network construction was ahead of schedule and it experienced strong demand for all its products.
Shares closed at 57 5/16 Thursday, well below their 52-week high of 100 1/8. Yesterday, the company announced its would supplymore modem connections to America Online Inc. (NYSE: AOL).
Level 3 Communications is building an upgradeable international network optimized for Internet Protocol technology which combines local, long distance, and undersea networks, which it expects to complete in the first quarter of 2001.
The net loss for the quarter was $147 million, or 43 cents a share, far wider than the $49 million lost in 1998's third quarter. Revenue was $134 million for the quarter, compared to $106 million in the same period of 1998.
"We met or exceeded all of our network infrastructure milestones, and made particularly strong progress in the construction of our upgradeable intercity networks," said James Q. Crowe, CEO, in a company release. Level 3 completed, on average, over 260 miles a week in the U.S. during the quarter.
The increasing demand for Level 3's services created by web-based companies led to a 40 percent increase in customer base for the quarter. Other good news included a round of capital received in September, which the company said will fund its business plan through Phase 4.
Communications and information services revenue was $69 million, an 86 percent increase over 1998 third quarter revenue of $37 million. Other revenue of $65 million for the third quarter included $60 million from coal mining, a 5 percent decrease from third quarter 1998 coal mining revenue of $63 million.
Level 3 spent $939 million on rolling out its U.S. and European intercity networks, local networks and its transatlantic cable network. Total capital expenditures for 1999 are now expected to be about $3.0 billion, versus a previously expected $2.5 billion due to the faster than expected completion of network construction. Among other significant expenses, Level 3 recognized $39 million in stock based compensation due to its stock option program
The demand for Level 3's colocation services has far exceeded expectations, and the hundreds of web-centric companies which locate their facilities in Level 3's gateways are a long term source of demand for its services," said Kevin O'Hara, executive vice president and chief operating officer of Level 3.
Level 3 has installed about 1,400 miles of fiber optic cable for its U.S. intercity network. Over 300 miles of the planned 1,800 mile ring -- which links London, Amsterdam, Frankfurt, Paris and Brussels in Level 3's European intercity network -- was build ahead of schedule. Rights-of-way have been secured for over 700 miles in Europe, and the company plans to have Ring 1 completed by September 2000.