Cogent reported earnings today, with revenues checking in at $53.9M – below the $54.5M floor they had projected. EBITDA of $16.6M wasn’t far off the $17M projections, however the company made material reductions in guidance for the second half of the year, cutting revenue projections from $225-235M to ‘over $218M’, and ebitda from $75-85M down to ‘more than $65M’. Earnings per share estimates were reduced from $(0.20)-(0.30) to $(0.50)-(0.60).
None of this should really surprise anyone. Back in June, Cogent took drastic action on pricing, cutting rates on its in-datacenter bandwidth by 30-60%. They did so in response to pressure from competitors who had begun to challenge their $10/mbps line in the sand. That such a pricing action would not affect results was not too probable, and Cogent’s stock price has been punished in advance.
Now, Cogent is still growing at a healthy rate, that rate is just not going to be 30% this year. It will be interesting to hear how their enterprise business (non-datacenter) is doing, since they sell to the same customers as CBeyond but with their own fiber connections as opposed to leasing.
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Categories: Financials · Internet Backbones
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rob;
THANKS for the primers and the commentary on all the next gen providers. This is truely helpful stuff for me, in that, i never get a chance to look (or think through) these things until we are well into the next q. Interesting how some next gener’s are holding in their (dapig) while others are really starting to feel the invisible hand. Sorry we didn’t meet up this year before the trip back to China. Next time.
jeremy.
Rob,
See what Level(3) has done in response to Cogents recent price cuts? Seems it’s an all out war.
rdutt,
I haven’t heard that Level 3 has cut prices to match or anything really drastic. What have you heard?