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I-Link Predicts First Profit by Late '98: Bloomberg Forum
I-Link Predicts First Profit by Late '98: Bloomberg Forum
New York, June 23 (Bloomberg) -- I-Link Inc., a fledgling telecommunications carrier, expects to turn a profit later this year as it adds customers for its mix of voice, data, Internet and other diverse offerings, Chairman John W. Edwards said. ''We'll reach the break-even point in the fourth quarter and we'll continue to be very profitable as we accelerate revenue,'' Edwards told the Bloomberg Forum.
Four-year-old I-Link is among dozens of small companies challenging entrenched carriers like AT&T Corp., the largest long- distance carrier, and the regional Bell companies in the deregulated communications market.
To stand out, the Draper, Utah-based company has developed technology that ''leverages traditional infrastructure but uses it more effectively,'' Edwards told the Bloomberg Forum. In essence, I-Link uses techniques used to cram data over the Internet for an assortment of telecommunications services.
AT&T ''doesn't have a network to do that with the same intelligence,'' said Edwards, 43, a seven-year veteran of Novell Inc. By compressing data, I-Link is able to send ''20 times as much traffic on the same facility.''
While, AT&T and the Bell companies are profitable, I-Link has reported cumulative losses exceeding $61 million while investing around $40 million to develop its network.
In the first quarter, I-Link reported its net loss nearly doubled to $7.4 million, or 48 cents a diluted share, from $3.9 million, or 40 cents, a year earlier. Revenue tripled to $6.3 million.
Edwards said revenue should grow ''30-plus percent quarter over quarter and actually accelerate over the next year.'' That's the key to profitable operations, he added.
Compression Technology
Last year, I-Link acquired closely held MiBridge Inc. in Eatontown, New Jersey, a developer of compression and audio- conferencing technology. Besides using the MiBridge compression technology in its own work, Edwards said, I-Link has licensed it to others, including Lucent Technologies Inc., the No. 1 maker of telecommunications equipment, as well as second-place Northern Telecom Ltd.
Another licensee is IDT Corp., a rival that was one of the pioneers in offering voice telephone service over the Internet in 1991, Edwards said. IDT became profitable last year.
This year, I-Link established ViaNet Technologies Ltd. in Israel to develop and build new devices for communications access. ViaNet's engineers have built a new product dubbed C4 (for customer communications control center), which will be sold to small offices and residential customers early next year. ''You'll get Internet connections plus exposure to as many as 24 internal phone lines,'' Edwards said. C4, which hasn't been priced, is a 10-by-4-inch box that can be plugged into a telephone outlet, converting it to the small equivalent of the computerized switches that route traffic at telephone-company offices.
To fund operations, I-Link has raised money from several investor groups. One, Winter Harbor LLC, controlled by Host Marriott Corp. Chairman Richard E. Marriott, contributed $12.1 million last year and offered a $20 million credit facility this year.
Marriott, whose company is one of the biggest operators of luxury hotels and assisted-living communities, ''is a great financial partner'' and a customer, Edwards said. The Winter Harbor funds are separate from Host Marriott funds, he explained.
Other prominent investors have been exploring opportunities in telecommunications, including Ronald S. Lauder, a director of Estee Lauder Cos., who's chairman of I-Link competitor RSL Communications Inc., and Philip Anschutz, former owner of Southern Pacific Corp., now chairman of Qwest Communications Inc.
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