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Level 3 slashes 1,400 jobs
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June 18, 2001: 11:29 a.m. ET
Communications network provider cites delinquent accounts as factor
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NEW YORK (CNNfn) - Level 3 Communications Inc. slashed 1,400 jobs and lowered its 2001 sales outlook Monday, becoming the latest telecommunications company to fall victim to the slowing economy as customers' delayed purchases and delinquent payments cut into its bottom line.
The Broomfield, Colo.-based fiber-optic communications network provider now anticipates 2001 consolidated revenue of $1.5 billion, compared with its previous projections of $1.6 billion-to-$1.7 billion.
Level 3 (LVLT: down $1.24 to $6.38, Research, Estimates) also expects a 2001 net loss of $7.50 a share. Excluding one-time non-cash charges of about 25 cents a share, the company expects a loss of $7.25 per share, unchanged from previous projections and slightly narrower than the $7.27 a share loss forecast by analysts, according to earnings tracker First Call.
"Although we did exceed expectations for the first quarter, and we expect to be substantially in line with our previous second-quarter projections, the continuing slowdown in the economy is significantly impacting our business," Level 3 CEO James Crowe said, adding that he expects a recovery in the second half of 2001.
In a letter to stockholders, Crowe also said he and other top executives would cease personal sales of company stock in an effort to boost investor confidence.
Level 3's revised outlook follows Friday's profit warning by Toronto's Nortel Networks Corp. (NT: down $0.88 to $8.98, Research, Estimates), one of the biggest makers of telecommunications gear due to sluggish sales. JDS Uniphase (JDSU: down $0.81 to $11.63, Research, Estimates) also warned last week that it now expects a fourth-quarter loss instead of a profit.
Most of the 1,400 jobs that Level 3 is cutting come from its communications business, with about 820 in North America, 550 in Europe and 30 in Asia. Level 3, which employed 5,900 before the cuts, anticipates a one-time charge of $100 million in the second quarter related to the staff reductions and project deferrals.
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The company, which cited delayed purchases and delinquent payments by several customers and noted that 20 percent of its total revenue base is "at risk." Level 3 also plans to slash 2001 spending by $2.3 billion, including reductions in travel, use of contractors and other expenses. The company also plans to focus sales on bigger, well-established companies. 
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Level 3 Communications
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