CenturyLink Stock Spikes Following Strong Managed Services Earnings

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CenturyLink's stock surged 13 percent Thursday afternoon, following its earnings call Wednesday evening that highlighted a successful quarter for its burgeoning IT and managed services segment.

Despite a decline in second-quarter 2018 revenue, CenturyLink raised its full-year 2018 guidance and exceeded Wall Street's expectations for the quarter Wednesday evening.

CenturyLink has shifted its focus from legacy voice and connectivity solutions in favor of strategic IT solutions, especially since it closed its acquisition of Broomfield, Colo.-based Level 3 Communications last November. The change is welcome to its channel partner community, said Shane Stark, director of vendor and channel relations for Carrier Access, a Clive, Iowa-based solution provider and CenturyLink Premier partner.

[Related: CenturyLink Enterprise IT, Managed Services Are Bringing The Former CLEC Into The Future]

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"[CenturyLink] is certainly focused on SD-WAN and managed services and they seem to be doing really well with it," Stark said. "They also combined some systems that allows them to be more efficient."

CenturyLink, based in Monroe, La., reported consolidated total revenue of $5.90 billion for the second quarter, a decline of about 2 percent overall from $6.04 billion in the year-ago quarter.

On the business segment side, revenue declined 1.6 percent during the carrier's second financial quarter. Wholesale and indirect sales dipped 3 percent, and small and medium business sales slipped slightly.

IT and managed services, however, rose 5 percent during the quarter. The business segment earned $162 million compared with $154 million in the year-ago quarter.

Jeff Storey, Former Level 3 CEO and CenturyLink's new president and CEO, said the company's continued progress on its integration efforts contributed to a "solid quarter."

"Across the company, we are focused on profitable growth and providing a better experience for our customers and employees," Storey said during the earnings call.

CenturyLink's executive vice president and CFO, Sunit Patel, told investors that he expects the company's business services revenuet o start to increase as the company continues to focus on strategic IT solutions.