Level 3 (LVLT) reports earnings on Thursday, so here is a quick primer on what to expect. For more detailed thoughts, models from both thejuice and myself were posted to this blog. Level 3 does not provide quarterly guidance anymore, so expectations are a bit harder to define. Overall, expectations seem to be that ebitda will improve, that that improvement will be mostly due to cost savings. Everyone will be looking for any signs of a return to real core revenue growth but few expect to find it until next quarter.
Core revenue should grow sequentially from the Q1 number of $958M, but nobody seems to be expecting a big number here yet. If the wholesale voice number slides (or grows) a bunch, that is less of a big deal than the wholesale network, enterprise, or content divisions show strength or weakness. SBC and Other revenues are expected to decline, but not drop off any cliffs.
SG&A is expected to come down from $395M in Q1. Some people think it will drop a little ($5-10M), some think a lot ($20M?), nobody thinks it will go up. Gross margins are generally expected to rise slightly, but nothing major – mostly a restoration from a drop in Q1.
To reach the lower bar of full-year EBITDA guidance ($950M), they have to average $237.5M/quarter for the year. After Q1’s $211M, if they don’t get close to $230M for Q2 then guidance will be moot.
Nobody really watches the EPS line for this company, however the number ought to be in the range of -$0.11 give or take a bit, excluding one time events (which are frequent).
Ok, it’s time to stand and be counted.
The Morgan Stanley numbers come from an earnings preview issued in the past couple days. My own and those of thejuice come from the models we post on this blog. Notrom’s come from the IV board, although he may also have posted them here in a comment. Anyone else have numbers to throw in? Don’t be shy! I will update the table with any good faith guesses posted in the comments.
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