Level 3 cuts work force

(Telephony) Level 3 Communications announced a round of layoffs today that the carrier said is based on a transition of its business focus and not a cost-cutting measure related to the economic downturn.

Over the course of the “next few weeks,” Level 3 announced, it will reduce headcount by about 325 people, or 6% of its work force. Almost half the cuts--150 people--will come from Level 3’s world headquarters and other offices in Colorado, according to Josh Howell, senior vice president of corporate marketing.

Many of the cuts involve the elimination of jobs in corporate areas, including human resources and finance, that supported Level 3’s network-construction projects. Level 3 recently completed construction of its 20,000-mile intercity network.

“We have finished building the factory, and now we’re going to start selling the cars,” Howell said. “We have completed our core infrastructure and are now moving to an operational focus.”

Level 3 said its total number of employees will grow during 2001 as it hires more people in revenue-generating and customer-facing areas such as sales, provisioning, and network operations.

“We will be more aggressively targeting our sales backlog,” Howell added.

Level 3 is generally considered to be one of the healthier emerging carriers. Its business plan is pre-funded to cashflow breakeven, Howell said. At the end of 2000, the company had $4.2 billion in cash on its books.

Level 3’s revenue forecast for 2001 is for sales of $1.7 billion, up from $1.2 billion last year. But Level 3 warned in late January that it would post a larger net loss this year--about $7.50 per share--than previous estimates of $6.49 per share.

Wall Street reacted negatively to the news, sending the carrier’s stock down almost 20% in afternoon trading. Level 3 shares are now trading at a fraction less than $10 per share, a 52-week low.