Level 3 Communications slashed another 750 nonsales jobs from the budget Thursday afternoon, after announcing its third-quarter performance had beat analysts' consensus estimates.
Level 3 Communications slashed another 750 nonsales jobs from the budget Thursday afternoon, after announcing its third-quarter performance had beat analysts consensus estimates.
The Broomfield, Colo., carrier now has about 3,950 workers, down from 6,000 at the beginning of 2001. Most of the cuts announced this week will occur in the fourth quarter, in part through attrition, and will come from the communications business division, which contributed $319 million to the companys overall revenue of $375 million for the quarter.
"We are adjusting our business plan taking into account current conditions," said James Q. Crowe CEO of Level 3. "While we are certainly confident that the economy will improve, we cant predict the timing of that improvement and, consequently, we are reducing our expenditures to levels appropriate to todays performance, assuming no improvement."
Level 3 posted a net loss of $437 million, or $1.17 per share, compared with a $341 million loss, or 96 cents per share, for the same quarter a year ago. Excluding a $94 million net gain - primarily from previously announced debt for equity exchanges completed during the third quarter - the companys net loss was $531 million, or $1.42 per share. Analysts had predicted a $1.91-per-share loss.
Level 3 slashed its network and capital expenditures, and decided to continue cutting service to nonpaying customers.
Analysts tracking the company said that while the news overall is good for shareholders and the stock price could be boosted, the layoffs are a sign that growth is at a standstill.
"They are shutting down the model," said Cary Robinson, senior research analyst of communication services at U.S. Bancorp Piper Jaffray. "The growth is not there so they are scaling back."
Level 3 is not alone in attempting to stanch financial bleeding with job cuts: On Oct. 2, Cable & Wireless slashed about 450 people from its Business Markets group, which sells services to small and midsize enterprises. The group still has about 150 workers, though a representative said the market will be reached mostly through resellers, value-added resellers and systems integrators.