World Media Digest
Newly whole Broadwing claims market share gains
Ed Gubbins, 11.10.04, 4:17 PM ET
Telephony
In its first quarterly earnings call following a merger with Focal Communications, Broadwing (now officially Broadwing Corp.) claimed to be taking market share from rivals.
"Double-digit year-over-year losses in our largest competitors enterprise and carrier businesses vs. stable revenues from Broadwing indicates our sales team is making progress in taking market share as we strengthen the company," said Lynn Anderson, the companys chief financial officer.
Broadwing reported $163.4 million in revenue for the third quarter, 15% higher than the previous quarter and 14% higher than a year earlier. Revenue from communication services rose 15% sequentially and 14% year-over-year to $163.1 million in the third quarter, increases the company attributed largely to $20.5 million in revenue contributed by Focal in the single month that it was consolidated into Broadwing.
Gross margins for Broadwings communications services rose to 32% from 23% a year earlier.
Broadwing also reported third-quarter customer installations were up 22%, while customer growth was up 8%, a set of facts that Needham & Company analyst Vik Grover, in a research note issued today, called "a powerful leading indicator for improved top-line performance in the coming quarters."
"Third-quarter sales were the best weve had here," Anderson said.
Enterprise customers accounted for 64% of the revenue Broadwing earned in the quarter while carrier revenues constituted 36%.
Excluding revenue from Focal, revenue from Broadwings data and broadband services rose 5% sequentially to $100 million, an 11% rise from a year earlier. Voice revenue (excluding Focal) was down 8% sequentially to $42.3 million, due in large part to contract negotiations with Broadwings former owner, Cincinnati Bell. But with Focal, voice revenue was up 36% sequentially to $62.9 million.
In three months, when Broadwing reports its first full quarter of Focal contribution, the company expects voice and data revenues to each account for half of the companys communications services revenue.
Anderson reported seeing continued pricing pressure from all competitors, particularly with regard to large retail contracts.
Overall the company reported a net loss of $36.8 million, a 67% improvement from a year-earlier loss of $112.3 million.
The company also reported a total headcount of 1680 employees, a reduction of more than 10% from the end of the second quarter.
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