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Despite Widening Loss, PAETEC Reports Solid Quarter

Its loss widening, competitive service provider PAETEC (PAET) saw its share price drop by nearly 4 percent after it reported second-quarter earnings today.

The Fairport, N.Y.-based company said revenue dropped 2.5 percent and net losses reached $16.5 million for the quarter, a 12 percent increase over the same period a year ago.

Calling it “a solid quarter given the difficult economic environment,” chairman and CEO Arunas A. Chesonis said in a statement, “In the second quarter, we continued to expand what I believe is among the strongest communications portfolios in the industry, opening new markets in Northern California and a new data center in Pennsylvania.”

Shares in PAETEC have risen along with the broader market gains since March, until today’s drop.

In May. PAETEC said it had settled a patent-infringement suit brought by Sprint-Nextel over Sprint’s VoIP technology. PAETEC agreed to license some of Sprint’s patents, more than a year after Sprint sued PAETEC and three other rivals for IP telephony patent infringement.

Last month, the company cut the ribbon on an advanced data center in Bethlehem, Pa. The 6,500-square-feet facility offers connectivity up to 10 Gbps using more energy-efficient devices and a new Bi-Fuel power system that runs on either conventional diesel or a greener combination of diesel and natural gas.

As a sign of PAETEC’s relative strength during the downturn, Chesonis pointed to his company’s cash reserves of just under $140 million.

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