WinStar to Fire More Than Half Its Workforce
By Yuki Noguchi
Washington Post Staff Writer
Wednesday, August 1, 2001; Page E01
WinStar Communications Inc., a local phone-service company with a large presence in the Washington area, plans to lay off 55 percent to 60 percent of its remaining 2,200-person staff, possibly today, according to sources close to the company.
WinStar, which filed for bankruptcy protection in April, is likely to reduce its staff mostly in sales, marketing and network engineering, sources said.
The New York-based firm's yellow-and-gray trucks are a common sight on the streets of Washington, which is one of its key markets and where it employs about half of its staff. In April, WinStar laid off 44 percent of its 4,500-person staff -- about half of whom worked out of the Washington area. The number of local employees to be laid off this time is undetermined.
The company is trying to raise additional cash, partner with other firms or just sell its assets. WinStar, which was one of Wall Street's most beloved new technology companies only a few years ago, is also evaluating and scaling back its network, which beams data and voice traffic through a network of rooftop antennas. WinStar, which until earlier this year had been expanding its network into Europe, Asia and Latin America, will probably end up reducing its network from 60 to about 20 U.S. cities, a source said.
The eight-year-old company, however, is continuing to serve its customers, and if it decides to shut down parts of its network, will transfer those customers to other providers, a source said.
WinStar officials did not return repeated calls for comment.
At the beginning of this year, WinStar looked like it had up to $2 billion in backing from Lucent Technologies Inc., its biggest backer. It had 32,000 customers and a 60-city U.S. network -- much larger than Vienna-based Teligent Inc., which employed a similar technology to reach urban business customers. WinStar was among those companies that analysts believed could survive the shakeout of local telecommunications firms.
By mid-April, however, WinStar had announced that it would miss a $75 million interest payment. Then Lucent, which has its own grave financial problems, backed away from financing WinStar, leaving the company with virtually no access to cash. Within a few days, WinStar filed for Chapter 11 bankruptcy protection and sued Lucent, seeking $10 billion in damages.
Lucent, which lent WinStar a total of $600 million, said it would not provide further backing because WinStar was behind on its payments. WinStar's suit is pending.
More stories in TELECOM online at Washtech.com.
© 2001 The Washington Post Company |
