Global Crossing vows return to growth this year
By Ed Gubbins
Mar 15, 2007 3:08 PM
Two years ago, Global Crossing Chief Executive Officer John Legere told investors significant revenue declines in the company’s future were “a good thing” because they signaled a transition to a more profitable business. Today, pointing to three consecutive quarters of revenue growth, Legere projected annual revenue growth in 2007.
Global Crossing reported less than $1.9 billion in revenue for 2006, a 5% decline from the previous year. This year, however, the company expects revenue to grow 16% to 20%. And while it reported an adjusted earnings before interest taxes, depreciation and amortization (EBITDA) loss of $25 million for 2006, it plans to achieve positive adjusted EBITDA of more than $200 million this year.
After falling 21% last year, revenue from Global’s wholesale voice business should drop another 20% to 25% this year, to $490 million or less, the company said. But revenue from its higher margin growth businesses--selling IP services to carriers, global enterprises and distributors--should grow 37% to 40% this year, to more than $1.7 billion; it grew 15% last year. While those growth businesses contributed 67% of the company’s total sales last year, they should comprise more than 76% this year.
“The company is fundamentally different than we were a year ago,” Legere said. “Our financial viability was no longer in question in 2006 and therefore no longer an obstacle for our sale organization.”
“I’d categorize the company’s efforts as ‘game-changing,’” he added. “Where once we were considered at risk to re-enter bankruptcy, we’re now considered a consolidator.”
Indeed, part of the company’s growth going forward will come from two acquisitions it made last year: FiberNet and Impsat. The company is also currently trialing fixed-mobile convergence applications for future enterprise offerings.
Legere also claimed to be seeing benefits from carrier consolidation, as pricing stabilized and the customers of merged carriers opted to re-evaluate their suppliers.
“2007 happens to be our tenth anniversary,” he said, promising to “solidify [the company’s] turnaround” this year.
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