Broomfield, Colorado-based Level 3 reported a net loss of $858m during the 12 months ended December 31, 2002, compared to a net loss of $4.98bn in 2001, on revenue that grew 105% to $3.15bn. The sharp increase in revenue was due largely to acquisitions made during the year including resellers Corporate Software, which had revenue of $1.1bn in 2001, and Software Spectrum for which it paid $122m last May.

During the fourth quarter, Level 3 trimmed its net loss to $313m from a loss of $3.28bn in 2001, on revenue that grew to $945m from $326m. At the end of the period, the company had increased its cash reserves including $400m of restricted cash to $1.5bn up from its previous guidance of $1.3bn, and this was due to the sale of certain assets during the fourth quarter including Commonwealth Telephone, certain co-location facilities, and its toll road interest in Southern California CPTC, for which it received a total of $277m.

At the same time, the company said it had completed the acquisition of hosting and network provider Genuity, for which it paid $105m less than the initial purchase price of $242m announced last November. Last month, Level 3 announced that it would be laying off up to 800 of Genuity’s 2,300 employees, and it now expects to incur integration costs of between $75m and $100m in 2003.

As part of the transaction, Level 3 also acquired Genuity’s two largest contracts with Verizon and America Online, as well as other contracts that the company expects to contribute total revenue of over $1bn. However, Genuity’s revenue contribution during 2003 will be $600m, down 50% from its last fiscal year in 2001 when it generated $1.2bn.

For the first quarter of 2003, Level 3 expects revenue to be in the region of $935m, of which $395m will come from communications including $350m in services revenue, $520m from information services, and $20m from other businesses. Genuity, which is being renamed Genuity Managed Services and pooled into Level 3’s IT services operation alongside hosting provider iStructure and reseller Software Spectrum, is expected to contribute $110m in communications revenue during the quarter. Meanwhile, revenue for full-year 2003 is expected to increase to between $4bn and $4.4bn, of which between $1.7bn and $1.8bn is likely to come from its communications business.

Source: Computerwire