Global Crossing CFO Sees '01 Capital Spending At $4B
By JANET WHITMAN
Of DOW JONES NEWSWIRES
NEW YORK -- Global Crossing Ltd. (GBLX) Chief Financial Officer Dan Cohrs said Friday the company's capital expenditures for next year will total roughly $4 billion.
The capital expenditures, which include spending for Asia Global Crossing (AGCX), compare with an estimated $6 billion for this year, Cohrs told Dow Jones Newswires following a company presentation at a Bear Stearns communications conference.
During the presentation, Global Crossing Chief Executive Thomas Casey said he's "confident about the EBITDA and revenue growth (the company has) talked about over the next four years."
Global Crossing's adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, growth is targeted to exceed 35% per year through 2004, according to a slide during the presentation.
Casey reiterated the company's comfort with its revised guidance announced earlier this summer.
Global Crossing, which is near completion of its global fiber-optic network, said Aug. 31 it expects cash revenue - revenue plus incremental cash-deferred revenue - from continuing operations to be about $5.2 billion, up from a previous estimate of $4.84 billion and 38% above 1999 results. Global Crossing estimated recurring adjusted EBITDA, for the year will be about $1.34 billion, up from a previous projection of about $1.21 billion.
Including acquisitions, the company predicted 2000 cash revenue of $5.37 billion, 38% above 1999 levels, and a 56% increase in recurring adjusted EBITDA to $1.34 billion.
Global Crossing also said in August it expects recurring adjusted EBITDA for the third quarter to show "insignificant growth" from the second quarter's strong results because of seasonality in capacity sales.
Casey said Friday that he is confident that Global Crossing will meet or beat prior guidance for its third quarter, adding "I feel good about the year as a whole."
The company is slated to announce its third-quarter results Nov. 13.
CEO Casey, who took over the helm of Global Crossing on Oct. 11 after Leo Hindery Jr. stepped down as CEO, said he's "very comfortable with the demand equation for bandwidth" despite the alleged over capacity in the market.
There's "no such thing" as a capacity glut, he said. "A lot of fiber is being put in the ground, but it's a question of whether it's being lit."
Sinking fiber in the ground represents only a fraction of what it costs to have the fiber lit, he said, adding that companies likely won't activate the strands of fiber until there is demand for them.
Bermunda-based Global Crossing's costs are continuously coming down, while prices remain stable despite competition, said Casey. The company's third-quarter results will indicate "there's not a lot of change there," he said.
Every time the company announces a quarter, demand for bandwidth exceeds its expectations, he said.
When asked whether he has concerns about extending Global Crossing's network to include the critical "last mile" to connect with customers, Casey said the company is "committed to expanding deeper into the local network."
Global Crossing, which already is expanding its fiber network deeper into cities, is currently in discussions "with a couple of different people" to purchase fiber in 20 cities, primarily in the U.S., he said.
A number of companies have "come upon hard times" and may be willing to sell or swap such assets, he said.
Acquiring fiber deeper into the markets it serves, which would be faster and less expensive than Global Crossing building its own assets, would reduce the company's costs and increase the quality of its service, said Casey.
He added following the presentation that it would be 'very unlikely" for Global Crossing to acquire all of the assets of a distressed competitive local exchange carrier, or CLEC, with the company preferring instead to acquire only what it needs.
Casey attributed the slide in Global Crossing's stock over the past several months to the broad weakness in the telecom sector.
"The entire sector has been significantly revalued," said Casey. "It's not a Global Crossing phenomenon."
Given the change in market climate, "it is important for us to execute ... because the market will differentiate winners and losers and determine who will prevail," he said.
Global Crossing will be "one of the winners," he said, adding that the company has an advantage over some of its competitors because it has no need to access the capital markets to fund its business plan.
Casey also noted that while competition is built into the company's model, it has a first-mover advantage and is the only company with a seamless network already in place.
After gaining 3.3% Thursday, Global Crossing shares fell 7.1% to $21.88 recently on volume of 9 million compared with average daily volume of 11.9 million. The stock is down from a 52-week high of $61.81 posted Feb. 16, but near its 52-week low of $20.13 hit Oct. 11.
-Janet Whitman, Dow Jones Newswires; 201-938-5248; janet.whitman@dowjones.com |
