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Time Warner Telecom's Net Loss Widens

LITTLETON, Colo. (Reuters) - Time Warner Telecom Inc. (Nasdaq:TWTC - news), which provides voice and data communications services to businesses, on Tuesday posted a wider third-quarter loss due to acquisition-related costs and warned that customer bankruptcies, the weak economy, and soft demand would hurt revenues for several quarters.

The company, which is partly owned by media giant AOL Time Warner Inc. (NYSE:AOL - news), said its third-quarter net loss widened to $24.3 million, or 21 cents a share, from $2.3 million, or 2 cents a share, a year earlier.

Time Warner Telecom attributed the wider loss to increased depreciation and interest expenses related to its acquisition of GST Telecommunications Inc. assets in January.

Revenue rose 43 percent to $172.7 million, which was in line with the reduced forecast the company provided in September. It said customer bankruptcies and service cancellations caused a loss of $4 million in recurring monthly revenue during the third quarter.

Third-quarter earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 30 percent to $37 million.

``We continue to experience customer bankruptcies, slowing carrier demand and an overall weaker economy,'' Time Warner Telecom Chairman Larissa Herda said.

``I believe these factors may continue to impact revenue performance for several quarters. Until we work through the rash of bankruptcies in the telecom and other sectors, and the impact of customer disconnects, our net growth will be impacted,'' Herda said.

As a result, Time Warner Telecom said it expects little to no growth in fourth-quarter revenues and EBITDA.

Still, shares of Littleton, Colorado-based Time Warner Telecom rose $1.57, or 14.88 percent, to close at $12.12 on Nasdaq as analysts expressed optimism about some recent contract wins and the company's long-term prospects. The stock has fallen about 82 percent this year amid a sharp sell-off in shares of emerging communications companies.

``Though the company remained cautious on the call with respect to forward guidance due to continued customer bankruptcies, slower carrier demand, and overall economic weakness, it did indicate that pockets of its business were acting better and the company noted some fairly prominent customer wins in the quarter,'' said Thomas Weisel Partners LLC analyst Peter DeCaprio.

Time Warner Telecom recently won contracts with the Indianapolis Colts and Emmis Broadcasting, analysts said.

``We remain bullish on our long-term outlook for (Time Warner Telecom) given its high quality revenue stream and fully funded position, and we therefore reiterate our 'buy' rating,'' said CS First Boston analyst Mark Kastan.

``However, our outlook for flattish top line and EBITDA comparisons over the next 3 quarters due to the slow economy could limit near-term appreciation potential'' for the stock, Kastan said.

Time Warner Telecom, which serves 44 markets in 21 states, said its business remains fully funded. It said it had $380 million in cash and equivalents, and $750 million in available financing.

http://dailynews.yahoo.com/h/nm/20011106/tc/telecoms_timewarnertelecom_earns_dc_2.html