Level 3 Confirms High-Level Layoffs

Level 3 Communications Inc. (LVLT) on Tuesday confirmed layoff rumors from Monday, noting that directors and above were the most impacted by the 150 job cuts.

Grant van Rooyen, president of content markets; Scott Roberts, senior vice president of sales; and Randy Dunbar, senior vice president of transport services, were among the casualties.

In a statement, Level 3 said the layoffs were “driven by internal efficiencies, not external, economic conditions.”

But comments from executives during Level 3’s first quarter earnings report Tuesday morning seemed to contradict that assertion. CFO Sunit Patel said the economy fueled Level 3’s churn rates, including wholesale customer losses. That churn led to lower usage rates as well. Therefore, it would make sense for Level 3, which continues to bleed money, to fire some of its higher-paid employees.

Indeed, Level 3 recorded fewer sales in the first quarter of 2009 than analysts polled by Bloomberg had expected. Those observers had forecast revenue of $1.03 billion but the number came in at $980 million, down 10 percent from the same period a year earlier.

Still, the Colorado-based carrier managed to narrow its losses to $132 million, or 8 cents per share, compared to negative $190 million, or 12 cents per share, a year ago.

Level 3 is bound to suffer financial ripple effects throughout much of the year. One of those aftershocks will come in the form of a $6 million to $7 million charge Level 3 will incur for severance costs in the second quarter.

Level 3 has posted a profit once since 1999 – in the fourth quarter of 2008 on a one-time gain.