GX ( $7-$5.75 ) EPS-2.24 posts wider loss, warns of job cuts
By Jessica Hall
PHILADELPHIA, Aug 1 (Reuters) - Global Crossing Ltd. on Wednesday posted a wider second-quarter loss, slashed its revenue-growth outlook for the year, and said it would cut 2,000 jobs, or about 15 percent of its work force, and close some facilities in a move to save money.
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Hamilton, Bermuda-based Global Crossing said it suffered in the weak economy from slower sales to telecommunications carriers and corporations, and business failures among some customers.
Separately, other high-speed communications companies such as Global Crossing's subsidiary, Asia Global Crossing Ltd. (NYSE:AX - news), and Williams Communications Group Inc. < also reported second-quarter losses.
Global Crossing's (NYSE:GX - news) second-quarter net loss increased to $629.6 million, or 78 cents a share, compared with a loss of $365.4 million, or 62 cents a share a year ago.
Analysts had expected the company to post a loss in the range of 71 cents to 84 cents a share, with a mean forecast of a loss of 84 cents a share, according to research firm Thomson Financial/First Call.
Global Crossing, which built a high-speed fiber optic communications network linking 27 countries and more than 200 major cities, said revenues rose to $1.07 billion from $898.2 million a year ago.
The Telecommunications Services segment, which is includes commercial, consumer and carrier businesses for data, voice, and video services, posted cash revenue growth of 25 percent.
Sales to carriers were essentially unchanged from first quarter due, in part, to the bankruptcies and disconnections among data customers. That was offset by the strong voice sales due to accelerating growth in minutes-of-use and a smaller decline in rates.
Global Crossing and other network operators have been hurt over the past year by a sharp decline in rates for voice and data transmission services, particularly in the United States and along the trans-Atlantic undersea routes. Pricing pressures, however, have begun to ease.
``Pricing in telecoms are still going down. but...the rate of decline has slowed. Prices for most data products have been pretty stable. Prices for bandwidth products continue to go down, but they are declining at reasonable rates,'' Global Crossing's Chief Financial Officer Dan Cohrs said in a telephone interview.
GLOBAL CROSSING CUTS JOBS; SLASHES OUTLOOK
The company said it would close about 100 of its 600 offices and facilities worldwide, and cut jobs to reduce annualized operating expenses by about $160 million to $170 million. It will take a charge in the third-quarter of $250 million to $325 million to cover the cost of these cutbacks.
Global Crossing also said it may take a third-quarter charge to write down the value of certain strategic investments, such as Exodus Communications Inc. (NasdaqNM:EXDS - news). Exodus shares have fallen about 95 percent over the past six months.
For the full-year, Global Crossing expects its continuing operations to generate about $6.4 billion to $6.9 billion of cash revenue, about $4.4 billion to $4.5 billion in service revenues.
It previously expected cash earnings to be $7.1 billion to $7.3 billion. Recurring adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), or cash flow, will be about $1.6 billion to $2.0 billion, compared with previous forecasts of $2.0 billion to $2.1 billion.
It said the current consensus of analysts' earnings estimates for the third quarter and full-year are ``reasonable.'' Wall Street analysts expect Global Crossing to post a loss of 82 cents a share in the third quarter, and a loss of $3.17 a share for the full year, according to First Call.
ASIA GLOBAL CROSSING POSTS LOSS, RAISES REVENUE OUTLOOK
Asia Global Crossing posted a smaller-than-expected second-quarter loss, and raised its revenue growth outlook for the full year.
The company was created in 1999 as a joint venture between Global Crossing Ltd. (NYSE:GX - news), Microsoft Corp. (NasdaqNM:MSFT - news), and Softbank to build a high-speed communications network across Asia.
While carriers in North America have suffered from price wars and competition, Asia Global Crossing has benefited from limited competition and slim price declines in its region.
``Asia is at a different stage of development than the rest of the world in both connectivity infrastructure and the penetration of broadband usage. Competitive supply is only now being introduced -- often first by Asia Global Crossing. Our early mover advantage has helped us achieve strong performance since our initial public offering,'' said Asia Global Crossing Chief Executive John Legere.
The company's second-quarter net loss widened to $62.5 million, or 11 cents a share, compared with a net loss of $58.5, or 12 cents a share, a year ago. Excluding the impact of sales-type leases, the loss in the second quarter of 2000 was $73.6 million, or 15 cents a share.
Wall Street analysts expected Asia Global Crossing to post a loss in the range of 15 cents to 16 cents a share, according to First Call.
Total revenues fell to $17.9 million from $33.7 million a year ago. Excluding the effect of sales-type leases, revenues in the year-ago quarter would have been $2.5 million.
WILLIAMS POSTS LOSS ON WEAK REVENUES
Williams Communications on Wednesday posted a smaller-than-expected second-quarter loss, but had weak revenues as it deferred to several planned customer contracts.
Despite the disappointing revenues, Williams' stock jumped 9 cents, or 4.17 percent, to $2.25, after it slashed its capital spending budget for the 2001-2002 period and said it had enough money to fund its operations into 2004, pushing its stock up about 9 percent.
Shares of Williams have plunged about 92 percent over the past year amid the broad sell-off in upstart telecommunications and technology stocks.
Tulsa, Oklahoma-based company Williams said its second-quarter net loss was $250.1 million, or 51 cents a share, compared with a loss of $3.9 million, or 1 cent a share, including a one-time gain, a year ago.
Wall Street analysts had expected Williams to post a loss of 51 cents to 67 cents a share, with a mean forecast of a loss of 57 cents a share, according to First Call.
It said it expects its loss for the full year 2001 at $1.1 billion, or $2.29 a share, excluding certain charges. That is slightly narrower than the $2.33-per-share loss expected by analysts polled by First Call.
Second-quarter revenues rose 57 percent to $281.3 million. Network revenues increased 75 percent to $255.1 million, which was at the low end of the company's guidance. |
