Neutral Tandem Decelerates

Apparently tndm had a bit of a rough first quarter, something that its shareholders are unaccustomed to after years of steady strong growth.  Neither revenues of $44.8M nor earnings of $0.25 was what the markets were looking for.  EBITDA of $20.6M fell sequentially from $22.4M in the prior quarter, although the company did just barely manage sequential revenue growth again.   The company laid the blame on both increasing competition and weak overall economic conditions.  

Management has now guided to the low end of the guidance it offered for full year revenues of $185-200M and EBITDA of $81-96M.  That guidance still implies there is some revenue growth coming for the balance of the year, but perhaps not for EBITDA.  Billable minutes did rise to 24.7B from 23.8B in the fourth quarter, but pricing pressure wiped most of that out.  Are the days of easy growth for Neutral Tandem over for good?  Or is this just an economic aftershock as carriers of all stripes bring more interconnection expenses in-house?

Neutral Tandem probably can’t wait to get its Ethernet exchange up and running, they need something new to talk about.  That has always seemed like a natural extension of the company’s business, but the longer it takes the later they are to the party.

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Categories: Ethernet · VoIP