Tuesday November 13, 9:54 pm Eastern Time
Global Crossing Posts Wide Loss, Job Cuts
LOS ANGELES (Reuters) - High-speed communications network services company Global Crossing Ltd. (NYSE:GX - news) on Tuesday posted a third-quarter loss five times wider than a year earlier and said it would cut another 1,200 jobs as it moves to a more tightly focused recovery plan.
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Global Crossing, which operates a fiber-optic network that connects 200 cities around the world, posted a third-quarter net loss of $3.4 billion, or $3.84 per share, compared with a loss of $602.4 million, or 69 cents a share a year ago. Revenue rose to $792.9 million from $778.1 million in the year-earlier period.
The net loss included a $2.08 billion non-cash charge as the company wrote off the shares it had received from now-bankrupt Exodus Communication in exchange for the sale of its GlobalCenter subsidiary.
The company, which rents its network to other carriers and sells services to telecommunications carriers and other businesses, said it would cut an additional 1,200 jobs in addition to a previously announced reduction of 2,000 people as part of a plan to cut $550 million in 2002 from its annual operating costs.
Capital expenditures were projected to fall to near $1 billion to $1.25 billion in 2002, roughly a fourth of the $4.2 projected for this year as the company completes the construction of its core network.
Chief Executive John Legere, who took his post in October as Global Crossing floated and then scrapped plans to acquire the subsidiary Asia Global Crossing, which he had headed, said the company's focus had pulled back to a more realistic business plan.
'WHO WE ARE'
Instead of pitching the future benefits of its Internet-based and global networks to corporate clients, Global Crossing first needs to demonstrate it can save them money on current networks by bidding for their existing city-to-city data links, he said.
``What this structure does for us is to deal with the realities of who we are,'' Legere, the company's fifth CEO in three years, told Reuters.
With that restructuring, Global Crossing is on track to grow its service revenue by about 10 percent and approach break even on a cash-flow (EBITDA) basis in 2002, the company said.
For the current quarter, the company forecast between $725 million and $750 million in service revenue and an adjusted loss on an EBITDA basis of $150 million to $175 million.
The company has faced mounting pressure from investors and creditors. On Oct. 11 Moody's Investors Service cut Global Crossing's debt three notches deeper into junk status in a move that affected some $9.2 billion in debt and preferred securities. Moody's questioned whether the company could remain in compliance with its bank covenants.
Standard and Poor's downgraded Global Crossing's corporate debt rating on Oct. 5 and left it on watch with negative implications.
Chief Financial Officer Dan Cohrs said the company was in talks with its banks to amend the covenants on about $2.2 billion in borrowing. Given the company's current outlook, it would fail to meet the current specified financial ratios in the current quarter, he said.
Global Crossing will have to pay more in fees in order to amend the covenants, but is not seeking to restructure the debt and is likely to have a renegotiated deal with banks by early December, he said.
Shares in Global Crossing closed up almost a percent at $1.07 on the New York Stock Exchange. The stock has lost almost 93 percent this year in line with the sharp downturn in telecommunications spending. The shares have bounced back from a low of 38 cents on Oct. 9. |
