Disconnects Drive CLEC Share Dive

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Shares of Time Warner Telecom fell sharply last Monday Feb. 2 (26%, or $2.82 per share) to $8.10 each, after the competitive local-exchange carrier reported disappointing fourth-quarter results.

The stock regained some ground on Feb. 3, rising 20 cents to $8.30 but the slide continued the next day when shares fell 60 cents, to $7.70.

Revenue was down 3.3% to $169.4 million, but the Denver-based CLEC managed to pare losses in the quarter to $21.3 million (19 cents per share), compared to a loss of $243.7 million, ($2.12) in the same period of 2002. Increasing disconnects and weaker network-capacity sales to other carriers appeared to spook investors.

Time Warner Telecom said disconnects accounted for a loss of about $2.9 million in monthly revenue and $13.3 million for the year. It attributed the disconnects to the economic environment and continued customer network optimization.

The company said it expects disconnects and pricing pressures to continue, but was optimistic about growth in its data and Internet-services units.