Earnings Everywhere: Qwest, Sprint, Switch&Data, Savvis

July 29th, 2009 by · Leave a Comment

So many companies in this sector have chosen today and tomorrow to report earnings that it is hard to keep up with.  There's only so much one can say about each, so lets go through a few of them quickly:

Sprint Nextel (NYSE:S, news, filings) released earnings today, proving that they have turned the corner but also that it is a long corner.  They lost 'only' 991K postpaid customers, gained 938K in the prepaid department over at Boost Mobile, and overall had their best performance in a long time.  But 'best' is relative, while revenues of $8.14B were in line, the loss of $0.13 per share wasn't what the market was hoping for.  Of course, the market prefers instant gratification, whereas Sprint's issues will require a long term effort to really turn around - so none of this was terribly surprising.  More important than parsing the speed of their recovery effort out of their numbers was the recent outsourcing of network operations to Ericsson (NASDAQ:ERIC, news, filings) earlier this month, the developing effects of which we will be watching for not just quarters but years to come.

q checked in with somewhat mixed results.  Revenues of $3.09B were a bit light, but  EBITDA of $1.09B was pretty good and earnings per share of $0.12 were a bit better than expected. Free cash flow of $657M was pretty high.  The company even managed to narrow EBITDA guidance from $4.2-4.4B up to $4.25-4.4B and raise FCF guidance from $1.4-1.5B to $1.5-1.6B.  Business Markets was flat, Wholesale Markets had weak revenue offset by cost savings, and Mass Markets were down sequentially alongside residential wireline losses.  Overall, no real surprises here.  Qwest's potential sale of its longhaul unit was the story of Q2, now that it is off the market again we all get to wonder if anything will happen to break the monotony.

In the datacenter space, sdxc was more positive but not any more exciting.  Revenues rose sequentially to $49.4 from $47.1, and EBITDA rose to $18.7 from $16.6.  They updated their projections, raising EBITDA guidance slightly to $74-75M, but lowering revenue guidance - also slightly - to $206-208M.  So far today the market has not been pleased, however the stock has been rising rapidly for the last three weeks so it is giving a little back.

Despite being in the healthier datacenter and hosting space, Savvis (news, filings) [a subsidiary of CenturyLink (NYSE:CTL, news, filings)] sells more managed services which have been affected more by the economy.  Thus objectively the company had a bit tougher time this quarter than the pure colo side did.  The company saw revenues of $219.9M, an increase over last year but a slight sequential decline.  Colocation and Hosting were basically flat sequentially, while network services declined slightly.  Adjusted EBITDA of $55.1M was similarly up over last year, but a down sequentially. The company adjusted its ebitda and cash flow guidance somewhat, but nothing major, and said Q3 revenues would probably be down sequentially again.  Nevertheless, the market has responded positively - apparently they were expecting things to go downhill more precipitously.   The company also announced a planned expansion of its Weehawken NJ facility of some 105,000 square feet.  The driving force behind the plan is of course the financial industry, which everyone seems to be aiming at right now but which Savvis has always done well in.

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Categories: Datacenter · Financials · ILECs, PTTs · Internet Backbones

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