Global Crossing Saw Loss Narrow
In 3rd Period; Sales Beat Estimates
By SHAWN YOUNG
Staff Reporter of THE WALL STREET JOURNAL
Global Crossing Ltd. posted a narrower third-quarter loss and stronger revenue than analysts expected as the multinational telecommunications carrier chalked up strong sales of data services.
The Hamilton, Bermuda, company reported a loss of $602 million, or 69 cents a share, compared with profit of $107 million, or 30 cents a diluted share, in the year-earlier third quarter. Earnings for that period were inflated by a $224 million one-time gain from the breakup fee from Global's scuttled merger with the former U S West, which chose rival suitor Qwest Communications International Inc.
Revenue was $1.01 billion, compared with $235 million a year ago. The year-ago figure isn't adjusted for Global's subsequent acquisitions, which included Frontier Corp., Racal Telecom and IXNet Inc.
On an operating basis that excludes one-time items and operations the company is discontinuing, Global lost $572 million, or 65 cents a share. Analysts surveyed by First Call/Thomson Financial had expected an operating loss of 79 cents. A year ago, Global lost $29 million, or seven cents, not adjusted for the subsequent acquisitions, said Chief Financial Officer Daniel Cohrs.
The company's operating cash flow, a closely watched measure, soundly beat analysts' estimates, coming in at $355 million, adjusted for the anticipated sale of the local phone business the company acquired from Frontier to Citizens Communications Co. for an estimated $3.65 billion. Operating results include the GlobalCenter data-center operation Global is selling to Exodus Communications Inc.
"What's really driving our business is very strong growth in our data business," Mr. Cohrs said. The company has only a tiny exposure to the dwindling consumer voice long-distance business that is hampering many rivals, including AT&T Corp. and WorldCom Inc. It stands to benefit from sales of transmission capacity to other companies that may be scaling back on plans to expand their global networks, he said.
Chief Executive Tom Casey said the company remains confident it can produce revenue growth of about 30% a year and operating cash-flow growth of about 35% a year over the next three or four years. The company said operating cash flow and currently secured sources of funding are sufficient to its plans and operations until it turns free cash flow positive in 2002.
Results were released after 4 p.m. Eastern time Monday. Global shares have dropped more than 50% this year and fell to a 52-week low of $16.38 Monday before closing down 31 cents at $17.63 in 4 p.m. New York Stock Exchange composite trading.
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