CenturyLink Has Sales Decline in First Quarter After Buying Level 3; Stock Up Thursday
In CenturyLink's first quarter after buying Level 3, sales fell about 2 percent to $6.1 billion from the year-ago Q4. Results left analysts with some cautious optimism and concerns. The stock closed up 8.8 percent to $19.13 Thursday, after the…
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previous day's after-regular-trading-hours report. "We are confident in our 2018 financial outlook," said Chief Financial Officer Sunit Patel, expecting adjusted EBITDA of up to $8.95 billion and free cash flow up to $3.35 billion, excluding Level 3 integration costs. "At first blush, the company's 2018 guidance looks terrific," wrote MoffettNathanson's Nick Del Deo. "But first blushes can fade." The telco/ISP/fiber backbone company expects $975 million in annual savings, said CEO Glen Post. "In its first quarter as a combined company, CenturyLink-Level 3 demonstrated signs of operational turnaround, glimmers of growth, and confidence in its outlook," Macquarie Research's Amy Yong wrote investors in a note, with the subject line "Better Together," and the "consumer business still faces stiff competition while growth in low-band/legacy is stale." Calling this year's revenue "vulnerable," Raymond James' Frank Louthan said the company is following the "path" of Time Warner Telecom, which CenturyLink bought previously, "whereby nothing changed for sales into the close of the year, leaving investors with a good print and appearance of strong selling exit to the year. Beginning in January, however, all the changes ... are deployed, and as the targets shift we believe the Q4 ’17 results are not indicative of current momentum." Thursday, the combined company expanded duties of executives overseeing sales to clients including government agencies (see the personals section of this publication's issue).