Tw Telecom Posts Surprise 1Q Profit

LITTLETON, Colo. (AP) — Voice and data services provider tw telecom Inc. reported a profit for the first quarter with a growing base of business customers, surprising Wall Street analysts.

The company said late Monday its profit for the three months ended March 31 came to $2.9 million, or 2 cents per share, compared with a loss of $4.8 million, or 3 cents per share, a year ago.

Revenue climbed 5 percent to $297.6 million from $282.6 million.

Analysts polled by Thomson Reuters expected a loss of 2 cents per share on revenue of $295 million.

The company said revenue from businesses climbed by $19 million, or 9 percent, year-over-year, offsetting a roughly $4 million decline in revenue from communications carriers.

But the slow economy kept tw telecom's "churn," or customer turnover rate, stubbornly high, growing to 1.3 percent from 1.1 percent in the quarter a year earlier.

In a note to investors Tuesday, SunTrust Robinson Humphrey analyst Robert Dezego said the company's churn rate was slightly higher than he expected.

But he reiterated a "Buy" rating on shares and said the company "is still executing well in a tough economy and remains well positioned" with more than $350 million in cash, no major debt maturing until 2013 and a forecast of positive free cash flow for the year.

The company's shares closed down 19 cents at $10 in regular trading Monday.