Williams misses Street estimates

Williams Communications reported a net loss that was 10¢ per share larger than analysts’ forecasts, but its share price was up slightly on the news that the company left unchanged previous revenue and earnings guidance.

In the first quarter, Williams reported a net loss, which includes one-time items, of $306.6 million, or 65¢ a share, compared with a loss of $121.6 million, or 26¢, in the year-ago period. Analysts expected Williams to report a loss of 55¢ per share, according to First Call/Thomson Financial.

“We chose in the first quarter market environment, which saw telecom equities decline, to not sell as many of our investments as we previously indicated we might,” said Scott Schubert, chief financial officer of Williams. “In addition, we took a negative mark to market [adjustment] on some of our equities held for sale. As a result of these two things, our loss per share was at the high end of previous guidance.” Expenses related to the spinoff of Williams Communications also contributed to the large loss.

Excluding $50.6 cash investment gains, quarterly operational EBITDA was a negative $44.6 million, compared to fourth quarter negative EBITDA of $34.3 million. “These results favorably exceed market expectations, reflecting an accelerated transition to full operations status,” said a statement by Williams.

The carrier’s first quarter consolidated revenue increased to $276.1 million, a 69% increase over first quarter 2000. Recurring network revenues totaled $248.8 million, with $7.8 million of that comprising dark fiber sales.

Despite the wider net and EBITDA losses, Williams reaffirmed previous guidance that it would be EBITDA positive on an operational basis by the end of this year. Revenue guidance was adjusted slightly due to a potential loss of $90 million in revenue from a contract with Winstar, a bankrupt CLEC. Williams said full-year revenue would be in the $1.2 billion to $1.3 billion range.

In line with other carriers, Williams reduced its forecasts for capital spending in 2001-2002 to $3.2 billion from $3.9 billion. Schubert said greater purchasing power, the ability to reduce time between capital deployment and the realization of revenue, and the choice to lease rather than build colocation space contributed to the cut.

At the end of the quarter, Williams Communications had $1.1 billion in cash and cash equivalents, $100 million in investments in publicly traded securities, and $525 million available under its $1.05 billion bank credit facility. Since the beginning of 2001, Williams has raised additional liquidity of $2.4 billion. Williams said its business plan is now fully funded into 2003, when it expects to achieve free cash flow.

“We continue to see strong demand for our products,” said Howard Janzen, chairman and CEO of Williams. “In the current environment, established providers are increasingly seeing the necessity of outsourcing network requirements.”