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Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (721)	3/28/2001 12:04:36 PM
From: ms.smartest.person	Read Replies (2) \| Respond to of 2248

CyberWorks Loses $886 Mln as Internet Plans Stumble (Update5) By Cathy Chan and Kenneth Wong Hong Kong, March 28 (Bloomberg) -- Pacific Century CyberWorks Ltd., Hong Kong's biggest phone company, lost $886 million last year after its plan to use income from fixed-line services to pay for high-risk Internet expansion faltered. The loss reflected $667 million of charges mainly related to a writedown in the value of its Internet investments. Earnings were crimped by net interest charges of $302 million related to debt it raised for its $28 billion purchase of Cable & Wireless HKT Ltd. in August. The result exceeds the worst forecast of a $334 million loss in a Bloomberg survey of seven analysts. ``There were many one-off items we needed to address as a result of the merger,'' said Deputy Chairman Francis Yuen, who is also the right-hand man of Richard Li, the founder of CyberWorks. Li did not attend the news conference. CyberWorks, which reported profit of $44 million in 1999, was the darling of investors last year after Li promised to create Asia's top Internet company. Its shares have plunged over 75 percent since it bought HKT, amid a slump in the industry that caused investors to question the value of Internet investments. The company, formed two years ago by Li, son of Hong Kong billionaire Li Ka-shing, said its sales were $935 million, compared with $19 million a year earlier. The loss per share was 47.54 HK cents (6 cents) against 9.99 HK cents earnings a year earlier, the company said. `Worse Than Expected' Earnings before tax, interest payments, debt repayment and writing down the value of capital equipment and other provisions came to $191 million. Operating profit was $67 million. ``The provisions were worse than we were expecting, but that probably means that they are clearing the decks for next year and we can expect little in terms of investment losses going forward,'' said Jahanzeb Naseer, a regional telecommunications analyst at ABN Amro Holding NV. The provision includes about $627 million in losses on securities and other investments, and $40 million as fixed assets charges. CyberWorks said the group's capital expenditure will decline by at least 10 percent in 2001. The company also wrote off $22 billion in goodwill against its reserves and said its accumulated losses now exceed its accumulated profit by $1.8 billion. Timing The timing of the write-off saved CyberWorks from even greater losses in the future. A new accounting rule in Hong Kong, which becomes effective this year, requires companies to amortize goodwill against their profit over up to 20 years. The company said they're not ``concerned'' about the negative balance sheet because it was ``well-anticipated at the time of the merger,'' Yuen said. CyberWorks' profit is expected to be dented by continuing high interest expenses, as the company estimates net interest costs to rise to $490 million, mainly from the $4.7 billion loan raised in February to help repay the original credit used for the HKT purchase. The company said it will limit losses before interest, tax, depreciation and amortization in its business-to-consumer Internet operations to less than $200 million this year. During the 12-month period, CyberWorks' telecommunication services revenue fell 7 percent, largely due to a 34 percent decline in international voice services. This was offset by an 8 percent increase in telephone service revenues to $1 billion after the company raised its residential line charges in September 1999. Additional revenue increases are expected this year as the company increased fees on residential and business lines in January. CyberWorks shares fell 0.7 percent to HK$3.475. quote.bloomberg.com