Data bringes networkers bucks
Revenue and profit margins for optical carriers targeting businesses are skyrocketing, while Internet companies delivered mixed results.
Broadwing, the company formed after Cincinnati Bell bought IXC Communications in November 1999, said total revenue for 2000s final quarter rose 27 percent to $561 million, and 23 percent for the year to $2 billion.
Data supplied 70 percent of the growth in broadband-generated revenue for the quarter and 52 percent of total revenue growth, said Kevin Mooney, chief financial officer at Broadwing.
Qwest Communications International, the carrier that bought U S West, echoed the trend. Internet and data service revenue rose almost 40 percent to more than $1 billion in the quarter and generated 70 percent of total revenue growth in the quarter. Qwest reported revenue of $5 billion, up 10 percent for the quarter.
Qwest has 14 data centers in operation and plans to add 10 more this year. Its operating profit rose 20 percent to $2 billion for the last three months and 17 percent for the year to $7.4 billion, on a 14 percent increase in revenue to $19 billion.
Broadwing, Qwest and other carriers, including Level 3 Communications, are leveraging the lower cost of newer equipment and more efficient networks, said Andrew Hamerling, a securities analyst at Bank of America Montgomery Securities.
"Broadwing is rock-solid," Hamerling said. "The management team is very smart and know how to execute on the business side. They target small to medium-size business and some of the Fortune 500."
Still, Hamerling said that when Level 3 has its network up and running completely this year there will be more pricing pressure than Broadwing has experienced so far.
Gary Jacobi, a securities analyst at Deutsche Banc Alex. Brown, said transport is a commodity and prices will continue falling. "It is only a matter of time before there is seriously disruptive pricing" from new carriers, he said.
Dot-coms, meanwhile, produced a mixed bag for the quarter. Brio Technology, a business intelligence software vendor, said revenue rose 14 percent to $38.9 million and that it lost $260,000 vs. a $3.9 million loss a year ago. WebTrends, another business software company, said revenue jumped 175 percent to $20.4 million and profits 169 percent to $3.1 million.
Flower seller FTD.coms revenue rose 38 percent to $32.5 million and it was profitable for its second straight quarter. Internet content deliverer Akamai Technologies said its revenue was up 1,300 percent from a year ago and it narrowed its losses slightly to $303 million.
But Autobytel.com, an internationally branded online seller of new and used vehicles, said revenue rose 35 percent to $16.8 million and it lost $3.3 million.