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21Vianet Swings to Profit on Improved Operating Efficiency

Anna Vodopyanova 2018-11-19 14:54 PM
21Vianet Swings to Profit on Improved Operating Efficiency

21Vianet Group Inc. (Nasdaq: VNET) reported late Thursday that its results swung to an income of $5.5 million in the first quarter in contrast to a loss of $18.6 million a year ago.

The company, which provides data centers and cloud computing services in China, said earnings per share in the first three months came to 5 cents in contrast to a loss of 16 cents per share reported year-over-year.

21Vianet credited the sale of its managed network services businesses, which led to improved operating efficiency, for its strong first quarter performance. The sale, which took place in September, resulted in an additional $107.9 million profit in the fourth quarter. 

Revenue for the first quarter, driven by increased demand for the company's services, which have changed to hosting and related services only, grew to $127.7 million, up 13 percent from the same period last year.

"During the quarter, the demand for computing and storage capacity from both large and small corporations in China continued to grow," said Alvin Wang, president and chief executive officer of 21Vianet. "To capitalize on the market opportunities, we further expanded our data center network while maintaining our industry-leading service quality."

In March, the company announced its long-term partnership with Microsoft Corp. had been extended to provide cloud services to Chinese customers. Wang noted the partnership would push the company to continue improving the delivery of localized and customized cloud solutions with optimal user experiences to Chinese customers.

21Vianet's other partners include China's search engine giant Baidu Inc. (Nasdaq: BIDU), social media site Renren Inc. (NYSE: RENN), top Chinese rideshare company Didi Chuxing, Warburg Pincus, Google (Nasdaq: GOOGL), and the International Business Machines Corp. (NYSE: IBM).

For the second quarter, 21Vianet said it expected revenue to be in the range of $129.1 million to $132.3 million compared to hosting and related service revenues of $118.5 million a year ago.

The chief financial officer of 21Vianet, Sharon Liu, said in a statement: "As our restructuring strategy to fully focus on our core hosting and related services business continues to prove successful, we expect our growth momentum to carry into the quarters ahead."

Immediately after 21Vianet disclosed its quarterly earnings, its stock briefly fell 6 percent to $6.60 per ADS in post-market trading from the close of $7.01 per share Thursday. The company&`#`39;s stock rebounded later in the evening.