Level 3 Communications Inc., which provides high-speed communications services to businesses, on Monday cut its financial targets through 2002 and said it would eliminate about 1,400 jobs, or 24 percent of its work force, due to the slowing economy and delayed purchases by customers. 

Level 3 said the job cuts would occur primarily in its core communications operations in North America and Europe. It will take a $100 million charge in the second quarter to cover the cost of staff reductions and project deferrals. 

The company also cut its spending plans and said it would focus on larger and more financially stable customers, rather than targeting early-stage companies with partially funded business plans. 

``Although we did exceed expectations for the first quarter, and we expect to be substantially in line with our previous second-quarter projections, the continuing slowdown in the economy is significantly impacting our business,'' said Level 3 Chief Executive James Crowe. 

``While it is difficult to predict with any certainty, we, like many industry observers, anticipate a recovery in late 2001,'' Crowe said. Level 3 expects to be break-even on a free-cash-flow basis in early 2004, compared with an earlier projection of late 2003. 

Shares of Level 3 hit an all-time low of $6.02, but recovered somewhat to trade at $6.12, down $1.50 in late afternoon trading on Nasdaq. The stock has plunged about 93 percent over the past year amid the selloff in technology and telecommunications stocks. 

The market downturn hurt many of its corporate, Internet and telecommunications customers and forced some to disconnect service. As a result, Level 3 estimated that about 20 percent of its current recurring revenue base is at-risk. 

As it shifts its customer base, Level 3 expects to get about 85 percent to 90 percent of its recurring revenues from higher-quality customers by the end of the year. 

Broomfield, Colorado-based Level 3 in April posted a wider-than-expected first-quarter loss, but said it had not violated any loan covenants under its $1.78 billion secured credit facility. 

Level 3 said it now expects its 2001 revenues to be about $1.53 billion, down from earlier forecasts of $1.62 billion to $1.72 billion. It expects a wider-than-expected cash-flow loss of $420 million, compared with previous estimates of $330 million. 

It expects to post a net loss in 2001 of about $7.50 a share. Excluding one-time noncash charges, it expects to post a loss of $7.25 per share, unchanged from previous projections. 

Salomon Smith Barney analyst Jack Grubman cut Level 3 to neutral from buy. ``Clearly Level 3's business model has to change and there isn't a lot of visibility on execution of the lowered numbers and some uncertainty as to whether or not they're fully funded,'' Grubman said in a research report. 

For 2002, Level 3 expects revenues to be $1.92 billion to $2.02 billion, down from earlier forecasts of $2.52 billion to $2.72 billion. It aims to post positive cash flow, or EBITDA (earnings before interest, taxes, depreciation, and amortization), of $200 million to $250 million, which is in line with earlier forecasts. 

The reduced forecasts marked the second time in three months that Level 3 has slashed its growth forecasts through 2002. 

Between 2000 and 2005, Level 3 expects its communications revenues to grow at a compounded annual percentage rate in the mid-40s. Total information services and other revenue is expected to be about $230 million for 2001, $220 million for 2002, and $210 million for 2003. 

The company also cut its capital spending plans in 2001 to $3.0 billion from a range of $3.3 billion to $3.4 billion. In 2002, capital spending will be $1.5 billion, down from earlier forecasts of $2.0 billion to $2.4 billion. 

It plans to cut expenses by reducing travel and administrative expenses, and the curtailing the use of contractors. Level 3 also is looking at other initiatives, exploring contingency plans to further reduce cash expenditures, such as project deferrals and monetization of certain noncore assets.