Genuity wavers after mixed earnings report
...Genuity said it had expanded its credit agreement with Verizon Communications (VZ). Verizon will let Genuity borrow $900 million, up from $500 million. What's more, Verizon will provide credit support to let Genuity raise up to $2 billion in long-term capital. Genuity said it now has $4.75 billion in credit at its disposal.
Lower earnings in 2001
Genuity was not, however, immune from Internet and telecom sector woes. Paul Gudonis, the company's chairman, said in a press release that the failure of many dotcom companies "affected the demand and supply equation in our industry." Volume order was declining, he added, as corporate customers delayed their buying decisions.
Genuity reduced its 2001 earnings forecast and announced it was laying off 12 percent of its 4,800-person staff. The company, which had originally planned to take in at least $1.8 billion in 2001 revenue, cut its sales forecast to between $1.3 billion and $1.4 billion.
Analysts were expecting $1.5 billion on average, according to Thomson Financial/First Call. The company also cut capital spending projections to $1.4 billion, from $2.2 billion.
Thanks to the layoffs and other cost reductions, the company said it will lose between $1.30 and $1.35 per share in 2001, narrower than the $1.35 to $1.40 loss it had earlier forecast.
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