International network operator glbc announced their Q3 earnings results after the bell, but the results didn’t match up to earlier projections of a big second half. The company therefore reduced its guidance for revenue growth from $2.3-2.375B down to $2.275-2.3B, and cut its free cash flow estimate back to straddling the break even line – it had been $10-60M. OIBDA guidance remained generally inline, as they narrowed guidance a bit below the midpoint of what it had been previously. Here is a quick tabular summary of the company’s results in the context of the past four quarters:
|$ in millions||Q3/09||Q4/09||
|Total Invest & Grow||553||557||554||555||568||2275-2300|
|Cost of Revenue||443||461||455||431||440|
|Free Cash Flow||+52||+72||-72||-13
-10 to 10
|Capex & Capital Leases||33||49||55||63||43|
– note that I don’t include intersegment revenue in the GCUK, Impsat, or ROW numbers in this table
Revenue: Invest & Grow revenues surged in the quarter, just not mightily enough to stay inline with guidance. GC Impsat pulled its weight, but GCUK clearly faltered (down 4% in constant currency) and ROW grew but nowhere near enough to keep guidance levels. To make Invest & Grow guidance for the fourth quarter, the company will now need to check in at 598-623M, that’s still quite a steep ramp.
Costs & OIBDA: OIBDA of $109M was roughly inline with expectations, as costs remained in check – SG&A came in especially low this quarter although I expect that will bounce back some. OIBDA margins rose to 16.8%, which is a good thing of course. To make OIBDA guidance, they will need $121-136M in the fourth quarter. That’s also a steep ramp, but I expect it won’t be hard to reach if in fact they make the revenue number.
Concluding thoughts: For those expecting an earnings preview, my apologies – I have a nasty head cold and just couldn’t get one together with the acquisition of Genesis Networks to write about. But I would have been wrong, I did not anticipate a rough quarter on the revenue front. No further information on the size and timing of the impact of the Genesis Networks acquisition on revenues or OIBDA was offered, but I expect that it will come up in the CC tomorrow morning in some form.
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