UPDATE 2-Level 3 shares soar on smaller loss, recovery hopes

(Adds analyst, executives' comments, stock price, byline)

By Ritsuko Ando

NEW YORK, April 23 (Reuters) - Level 3 Communications (LVLT.O: Quote, Profile, Research) on Wednesday reported a smaller first-quarter loss due to cost cuts and stronger sales of network services, sending its shares up 18 percent.

Level 3, a communications and Internet backbone provider, said it had turned the corner after several quarters of difficulty in handling customer orders, helping its quarterly revenue gain 3 percent from a year earlier to $1.09 billion.

The Broomfield, Colorado-based company also reiterated its revenue outlook for the year and said it would stop burning cash in the remaining three quarters.

Its quarterly net loss narrowed to $181 million, or 12 cents a share, from $647 million, or 44 cents a share, a year earlier. Excluding costs of debt extinguishment, the year-earlier loss was 15 cents per share.

Analysts had expected a loss of 11 cents on revenue of $1.07 billion, according to Reuters Estimates.

Chief Executive James Crowe noted increasing demand for optical and IP services. Over half of Level 3's business is aimed at large service providers.

"We certainly benefited from that trend during the quarter, driven by growth in the delivery of video and other media over the Internet," he said.