Level 3 Surges Most Since August After 2012 Profit Outlook

Level 3 Communications Inc. gained the most in almost six months after the broadband services provider forecast that 2012 profit by one measure will rise as much as 25 percent as online video drives demand.

Adjusted earnings before interest, taxes, depreciation and amortization will increase by 20 percent to 25 percent from a year earlier, the Broomfield, Colorado-based company said today in a statement. Level 3 credited growth in its Core Network Services revenue as well as “cost synergies” following the October acquisition of Global Crossing Ltd.

The shares advanced 8.8 percent to $21.31 at the close in New York for their biggest one-day gain since Aug. 9. They have risen 15 percent this year.

“Their guidance is up 20 to 25 percent, and the CFO has a long track record of underpromising,” Donna Jaegers, a D.A. Davidson & Co. analyst in Denver, said in a telephone interview. She recommends buying the shares.

Chief Executive Officer James Crowe told analysts and investors on a conference call that Level 3 stands to benefit from “demand created by more and more video sold to individuals at their home -- entertainment, gaming, etc. -- but also the clearly growing demand to embed video in every enterprise communication.”

Level 3’s fourth-quarter net loss widened to $163 million, or 80 cents a share, from $52 million, or 47 cents, a year earlier. Excluding some items, the loss was 62 cents a share, the company said. The average of 11 analysts’ estimates compiled by Bloomberg was for an adjusted loss of $1.12 a share.

To contact the reporter on this story: Alexander Yablon in New York at ayablon@bloomberg.net

To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net

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