STAR Telecom Provides Revised Outlook On Second Quarter 1999
International Wholesale Margins to Impact Quarter
SANTA BARBARA, Calif.--(BUSINESS WIRE)--July 28, 1999--STAR Telecommunications, Inc. (Nasdaq:STRX - news) today announced that it expects second quarter EBITDA and earnings to fall below analysts' expectations. Through December 1999, the company expects continued shortfalls in meeting analysts' estimates for EBITDA and earnings primarily due to margin compression in the international wholesale market and delays in network provisioning.
For the current quarter, STAR expects revenues in the range of $270 million to $272 million; with EBITDA loss in the range of $18 million to $26 million (unaudited) and a loss per share of between $0.41 and $0.54 (unaudited). The wide range on estimates of EBITDA loss and loss per share figures is a result of a surprising retroactive rate increase imposed by a European telecom carrier that supplied services to STAR. This rate increase represents a possible charge of as much as $7.4 million against EBITDA or $0.12 per share. The rates retroactively imposed are currently in dispute and the amount of liability to be recorded in the second quarter is under review.
During the quarter, STAR's wholesale gross margins were impacted by pricing pressures on competitive routes and the delayed deployment of network from key suppliers, each of which is expected to continue through the third quarter of 1999 and possibly into the fourth quarter of 1999. The Company expects to experience continued high network costs associated with maintaining redundant systems as it migrates domestic traffic from its leased routes to owned fiber capacity over the next two quarters. As a result, STAR expects continued losses in earnings during the third and fourth quarter of 1999. EBITDA is expected to be negative during the third quarter but positive during the fourth quarter of 1999. The Company will release second quarter and year-to-date results for the quarter on August 12, 1999 and will provide a detailed update on its business activities at that time.
About STAR Telecommunications
STAR Telecommunications provides global telecommunications services to consumers, long distance carriers, multinational corporations and Internet service providers worldwide. STAR provides international and national long distance services, international private line, prepaid calling cards, dial around services and international toll free services. Visit STAR Telecom at startel.com
Except for the historical information contained herein, this press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. The Company's future actual results could differ materially from the forward-looking statements discussed herein. A list of the factors that could cause actual results to differ materially can be found in the documents the Company files with the SEC, including those contained in STAR's prospectus, and the Form 10-Q for the period ended March 31, 1999.
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Contact:
STAR Telecommunications
Michele Wolf, Ben Helvey, 805/899-1962
Investor Relations
or
Morgen-Walke Associates
Erica Abrams, Alicia Nieva-Woodgate, 415/296-7383 |
