Can you not read? NIX=OFF In my book.
dailynews.yahoo.com
Verizon Nixes NorthPoint Deal
By MATT MOORE, AP Business Writer
NEW YORK (AP) - Verizon Communications called off its planned merger with high-speed Internet access provider NorthPoint Communications Group Inc. on Wednesday, citing a deterioration in NorthPoint's business performance and finances.
The $800 million deal, announced in August, would have given New York-based Verizon a 55-percent stake in NorthPoint and a greater reach for offering fast digital subscriber line, or DSL, Internet service.
DSL is a technology used to overcome the constraints of a copper phone wire to deliver speedier Web services.
The merger agreement, which was slated for completion next year, called for the companies to combine their DSL businesses, including selected assets and personnel, to form a national broadband company.
Verizon said the deal was conditioned upon NorthPoint's business, operations and financial condition remaining materially the same as they were at the time the agreement was signed Aug. 7.
NorthPoint recently reported a continuing decline in revenues, an erosion of its customer base, an increase in expenses due to write-offs for increased bad debt, and, as a result, a material increase in net losses.
Verizon's announcement caused investors to bid down shares of San Francisco-based NorthPoint. In trading Wednesday afternoon on the Nasdaq Stock Market, shares of NorthPoint were down 9 cents, or 4.5 percent, to $2. Shares of Verizon were trading up $1 at $55.94 on the New York Stock Exchange (news - web sites).
Verizon spokesman David Frail declined to comment on financial impact of the decision. He said Verizon executives will discuss the implications during a conference call Thursday.
Verizon's decision also stripped NorthPoint of $450 million that would have funded the expansion of the DSL network.
Frail said the termination won't affect Verizon's goal of 500,000 DSL subscribers by Dec. 31.
Under the terms of the original merger, NorthPoint shareholders would have gotten $2.50 per share, or $350 million, in addition to the $450 million for network expansion.
Dan Ross, a telecom analyst with Sanders Morris Harris in Houston, said NorthPoint's DSL business suffered because its customers couldn't pay their bills.
``A lot of privately held Internet service providers are having difficulty paying their bills and that's NorthPoint's customers,'' Ross said.
NorthPoint sells DSL service to individual ISPs and they, in turn, resell it to customers and businesses.
Guzman & Co. analyst Patrick Comack of Miami said Verizon's decision leaves it free to concentrate on its own DSL business, which hasn't had problems collecting bill payments.
``Verizon is disassociating itself from NorthPoint and a sector that is very sick right now,'' he said. ``Verizon doesn't need a problem child.''
But the move could have a dire effect on NorthPoint, because the company was counting on the cash infusion from Verizon, Ross said.
``They don't have much cash and unless they find someone very, very quickly they're going to be in bankruptcy,'' said Ross. |
