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Williams Communications sees strong first quarter

Fiber-optic network company Williams Communications Group said on Tuesday that it expects first-quarter recurring network revenue to grow between 112 percent to 115 percent over last year.

The company also reiterated its full-year revenue guidance and its target of turning operating cash flow positive by the end of 2001.

Shares of the company slipped 8 cents to $17.02 in early trading. Williams Communications (NYSE: WCG) is 85 percent owned by energy company Williams Cos. Inc. (NYSE: WMB) and is expected to be spun-off from its parent in the first half of the year.

Tulsa, Okla.-based Williams Communications said first-quarter network revenue should be $243 million to $250 million, representing 112 percent to 115 percent growth in recurring revenue compared with a year earlier.

The company said that it still sees full-year 2001 revenue between $1.3 billion and $1.4 billion, with 93 percent coming from recurring sources, a 100 percent year-over-year growth in recurring revenue. Through 2005, network revenue is expected to grow approximately 60 percent to 65 percent per year.

The company reaffirmed its EBITDA (earnings before interest, taxes, depreciation and amortization) outlook, which would see the company EBITDA-positive on an operational basis by the end of 2001. Network operational EBITDA, which excludes investment gains, is also expected to become positive before the end of 2001, the company said.

For the first quarter, network operational EBITDA is forecast to be a loss of approximately $70 million, including costs associated to the discontinuation of the company's solutions business along with expenses related the company's spin-off.

First Call analysts' consensus estimates are for a loss of 53 cents a share for the first quarter, with full-year loss pegged at $2.17 a share.

Consolidated capital expenditures for the full year are forecast to be between $1.8 billion and $2.0 billion, with approximately $1.5 billion targeted to network projects, the company said.