TORONTO (Dow Jones)--360networks Inc. (TSIX), a communications network operator and builder, has an order backlog worth about US$900 million, and almost half of these orders are for network bandwidth sales.
In a conference call with analysts to discuss the company's second-quarter results, Larry Olsen, chief financial officer, said that 40% of the backlog orders are for higher margin bandwidth, or network, services. The rest of the backlog is for the sale of dark fiber, or fiber that lacks the electronics necessary for a network to operate.
Olsen said the company will realize about 60% to 70% of its $900 million in backlog this year.
360networks is trying to transform itself into a provider of network services from its traditional role as a network builder, in a bid to fuel growth.
For the second quarter, Olsen said that about 85% to 95% of its reported revenue of a US$158 million resulted from dark fiber or infrastructure sales. In the year-ago period, 360networks had revenue of US$81 million.
However, Olsen said that, by the end of 2001, about 65% of its total revenue will come from bandwidth sales.
In the second quarter, 360networks had gross margins of about 37% of revenue, up from 33% in the year-ago period. However, he said the company expects that margins over the longer term for infrastructure sales will drop to about 30%, underscoring the company's focus on the sale of bandwidth
services.
On the conference call, Olsen said the company is still on track to have about $3 billion in capital expenditures this year, split between the continued development of its networks, and co-location facilities. He also said that the capital expenditure budget would be about $2 billion to $2.5 billion in 2001.
-Ben Dummett, Dow Jones Newswires; 416-306-2024; |
