Here's a run down of what's happening at PSIX....who has attempted to build themselves as a global internet firm (fiber, hosting and services). Hmmmmmmmmm, could have some potentially devestating ramifications across the industry.
IMHO, best to sit on the sidelines, watch the carnage and after its over pick through the rubble for those "cigar butts"
Mad2
BTW-PSIX is toast, XPDR could be interesting as PSIX will be looking to monetize their 80% however that's a gamble as well (anualized revenue is 200mil, debit 50mil and market cap at 82 mil). First they have to find a buyer, then value it.....frankly I don't think its worth much more than the 82 mil the market is awarding the stock, assuming they find a buyer quickly.
public.wsj.com
Nov 03,2000
Weak Outlook, President's Resignation
Sink Shares of Internet Firm PSINet
By Jennifer Rewick
Staff Reporter of The Wall Street Journal
PSINet Inc., the once highflying and fast-growing Internet-service provider, posted a much wider loss for the third-quarter and warned that fourth-quarter results will be lower than expected.
PSINet shares fell 56% to $2.94 in 4 p.m. Nasdaq Stock Market trading Thursday.
Meanwhile, Chairman and Chief Executive William L. Schrader said Harold S. Wills, 58 years old, president and chief operating officer, resigned, by mutual consent, and that the Ashburn, Va., company would sell some of its assets and reduce planned capital expenditures through next year. Mr. Wills couldn't be reached for comment. PSINet's Problems
Drake Johnstone, analyst with Davenport & Co. in Richmond, Va., who lowered his rating to a "sell" from a "hold" a few months ago, said, "The potential sale of assets may be enough to pay off debt, but it remains unclear whether there would be enough value left for equity shareholders. If you're a buyer, why not wait for a firesale?"
Some analysts question whether the sale of the assets is enough. The company has only $1 billion in cash, and its quarterly burn rate is more than $500 million. The company in September told analysts it needed more than $600 million in 2001 to fund operating losses.
Larry Hyatt, the company's chief financial officer, said, "We have outstanding network and hosting assets and $1 billion in cash -- this company will survive," he said.
PSINet has hired E&Y Capital Advisors LLC, a subsidiary of Ernst & Young LLP, to perform a financial and operational review of the company. The findings will be presented to the board, which will then decide whether to explore its strategic options, including the possible sale of the company, Mr. Schrader said.
The company reported a net loss of $1.38 billion, or $7.34 a share, for the quarter, compared with a net loss of $82.3 million, or 68 cents a share, a year earlier. Excluding certain items, PSINet reported a loss per share of 95 cents. Analysts had expected a loss of $1.28 for the quarter, according to a consensus estimate by First Call/Thomson Financial.
Revenue more than doubled to $352.5 million from $140.6 million, driven by growth in its Web hosting business.
The net loss for the quarter included a $663.8 million charge related to the expected sale of its subsidiary, Xpedior Inc., a Chicago-based Web consulting firm. PSINet inherited an 80% stake in Xpedior when it bought Metamor Worldwide Inc. this summer. PSINet also is taking a $504 million asset write-down related to its plans to sell other units of the Metamor business.
Mr. Schrader said he was very disappointed by the company's third-quarter results, particularly the performance of the firm's consulting practice, which accounts for 40% of revenue, and for which the company paid $1.9 billion in stock, a hefty premium.
"In hindsight we purchased Metamor at the wrong time, when the whole industry was still on a growth pattern," he said in an interview. "The strategy was correct, we needed many of the assets. For the fourth-quarter we're uncertain where the industry is going to head."
Analysts had expected an earnings per share loss of $1.23 in the fourth-quarter before the warning, according to a consensus estimate by First Call/Thomson Financial.
Mr. Schrader blamed the slowdown of its carrier-access business, which accounts for about 40% of its revenue, on the slowdown of the free Internet service provider market.
Mr. Wills's responsibilities will be split between James F. Cragg, president of North American operations, and Harry G. Hobbs, president of international operations. |
