Cogent reported earnings today, with revenues checking in at $53.9M – below the $54.5M floor they had projected. EBITDA of $16.6M wasn’t far off the $17M projections, however the company made material reductions in guidance for the second half of the year, cutting revenue projections from $225-235M to ‘over $218M’, and ebitda from $75-85M down to ‘more than $65M’. Earnings per share estimates were reduced from $(0.20)-(0.30) to $(0.50)-(0.60).
None of this should really surprise anyone. Back in June, Cogent took drastic action on pricing, cutting rates on its in-datacenter bandwidth by 30-60%. They did so in response to pressure from competitors who had begun to challenge their $10/mbps line in the sand. That such a pricing action would not affect results was not too probable, and Cogent’s stock price has been punished in advance.
Now, Cogent is still growing at a healthy rate, that rate is just not going to be 30% this year. It will be interesting to hear how their enterprise business (non-datacenter) is doing, since they sell to the same customers as CBeyond but with their own fiber connections as opposed to leasing.