Neutral Tandem, Inc. Earnings Cheat Sheet: Falls Short of Expectations

In spite of rising revenues, Neutral Tandem, Inc.’s (NASDAQ:TNDM) profit declined in the third quarter. Neutral Tandem provides tandem interconnection services principally to competitive carriers, including wireless, wireline, cable and broadband telephone companies.

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Neutral Tandem Earnings Cheat Sheet for the Third Quarter

Results: Net income for Neutral Tandem, Inc. fell to $5.8 million (18 cents per share) vs. $9.6 million (29 cents per share) a year earlier. This is a decline of 39.3% from the year earlier quarter.

Revenue: Rose 44.9% to $67.3 million from the year earlier quarter.

Actual vs. Wall St. Expectations: TNDM fell short of the mean analyst estimate of 24 cents per share. Analysts were expecting revenue of $66.6 million.

Quoting Management: “We continue to be pleased with the overall performance of the Company, especially the progress we have made in developing our new service offerings to take advantage of our all IP Global MPLS network,” said Ed Evans, Chief Executive Officer of Neutral Tandem. “As projected last quarter, we still expect to be at the high end of the full-year revenue projections for the year. I believe this performance is largely attributable to our ability to diversify our service offerings and become a leading provider of global interconnection services. As global economic conditions continue to fluctuate, we remain focused at executing on our business plan as well as building a platform for future growth that will appeal to customers worldwide.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 45.4% to $65.1 million in the second quarter. The figure rose 48.2% in the first quarter from the year earlier and climbed 42.6% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now fallen short of estimates in the last two quarters. In the second quarter, it missed expectations by 4 cents with net income of 20 cents versus a mean estimate of net income of 24 cents per share.

Net income has dropped 23.1% year over year on average across the last five quarters. Performance was hurt by a 42.2% decline in the fourth quarter of the last fiscal year from the year earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 24 cents per share, down from 26 cents ninety days ago. For the fiscal year, the average estimate has moved down from $1 a share to 92 cents over the last ninety days.

Competitors to Watch: AT&T Inc. (NYSE:T), CenturyLink, Inc. (NYSE:CTL), Verizon Communications Inc. (NYSE:VZ), AboveNet, Inc. (NYSE:ABVT), Windstream Corporation (NASDAQ:WIN), Consolidated Communications Hldgs. Inc (NASDAQ:CNSL), Xfone, Inc. (AMEX:XFN), and Sprint Nextel (NYSE:S).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)