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Technology Stocks : Covad Communications - COVD -- Ignore unavailable to you. Want to Upgrade?

To: rrufff who wrote (9888)	12/29/2005 10:28:01 AM
From: rjk01	Respond to of 10485

earnings.nasdaq.com

To: rrufff who wrote (9888)	12/29/2005 10:44:00 AM
From: rjk01	Respond to of 10485

""Posted on Thu, Dec. 29, 2005 Covad, Verizon settle old lawsuitsDEAL WILL BOOST S.J. FIRM'S ACCESS TO PHONE LINESBy Jessie SeyferMercury NewsSan Jose's Covad Communications took a significant step away from its past legal battles over high-speed Internet access Wednesday, settling several lawsuits with Verizon Communications for an undisclosed amount. As part of the agreement, Covad gains more access to phone lines being used by resellers of Verizon's voice services, potentially bringing high-speed Internet access to many more customers in areas where the phone company dominates. Analysts said the deal is a boost for Covad, whose network cannot reach customers on its own. Covad uses phone companies' lines to bring Internet access to customers. The lawsuits had dragged on for more than four years and serve as a reminder of how much the telecommunications industry has changed. Covad, which emerged from bankruptcy in 2001 amid the dot-com crash, has managed to stay afloat, and has changed its focus from providing high-speed Internet access to consumers to offering Internet phone service to small businesses. Both, however, depend on existing phone lines to deliver Internet access. ``Covad spent a billion bucks in the boom times to build a network . . . with the plan to have millions of consumers buying DSL from them,'' said Dave Burstein, editor of the DSL Prime industry newsletter. ``The bottom fell out with the end of the boom. Their way forward is to stick with being VoIP provider and let the DSL stuff diminish over time.'' In addition, Covad made a deal with MCI, which is being bought by Verizon, in which Covad will be a preferred provider of local access and network services to MCI's DSL business customers. Covad stock jumped 43 percent to 96 cents on the American Stock Exchange with the news of the legal settlement. Covad had sued Bell Atlantic -- which later became Verizon -- in 1999, accusing the company of breaking antitrust law and setting up roadblocks as Covad built its broadband Digital Subscriber Line network. Since DSL piggybacks on phone lines, Covad needed a business relationship with several Baby Bell phone companies. Wednesday's settlement cleared up the legal disputes, which analysts said no longer made sense, given that Baby Bells have consolidated. Covad has fewer choices of companies with whom to have line-sharing agreements in order to keep selling DSL. ``They couldn't afford not to have the one-third of the U.S. that Verizon represents,'' Burstein said. ``It's kind of a completion of a strategy of working with the Bells as opposed to always fighting them,'' said Covad Chief Executive Charles Hoffman. ``Particularly with the consolidation of the industry, it's working out quite well.'' Covad still sells DSL to businesses and as a wholesaler to EarthLink and AOL. But for at least a year, it has also focused on selling Internet phone services to small businesses, a market that Hoffman calls ``a nice niche for us.'' Internet phone calls travel over the Internet instead of traditional phone lines and are generally cheaper. Earlier this month, industry analysts at In-Stat reported that Covad had a 28 percent share in that market, which is ``poised for explosive growth'' over the next four years, according to the In-Stat report. The company has not been profitable since its second quarter of 2004, Hoffman said, but is aiming to be by the middle of next year. Covad acquired Pleasanton-based GoBeam in March 2004, which helped give the company a boost in the Internet phone business, Hoffman said. Covad's next horizon is wireless, with the October acquisition of Fremont's NextWeb, which develops wireless Internet technology. A product announcement incorporating NextWeb technology is expected in January, Hoffman said. ``Wireless is very interesting and the future for us is no reliance on the Bells whatsoever,'' Hoffman said.""

To: rrufff who wrote (9888)	12/29/2005 8:39:24 PM
From: rjk01	Respond to of 10485

Motley Fool Covad's Stock Goes High-Speed Thursday December 29, 3:53 pm ET By Tom Taulli In the tech world, lawsuits may actually be a way to get both the sparring companies to strike a strategic alliance. Back in October, RealNetworks (Nasdaq: RNWK - News) settled its antitrust suit with Inside Value pick Microsoft (Nasdaq: MSFT - News). But that wasn't all -- the companies also announced a deal in which Microsoft would promote RealNetworks' Rhapsody music service on MSN.com. ADVERTISEMENT This week, we saw something similar happen: Covad (AMEX: DVW - News) settled its antitrust suit against Verizon (NYSE: VZ - News), and at the same time, Verizon said it was expanding its line-sharing agreement with Covad. The agreement allows more Verizon voice-service resellers -- like Covad -- to sell DSL services, and it also includes an expanded pact for line-sharing with MCI, which is a division of Verizon. Such agreements are critical. After all, to provide DSL service, a company like Covad needs to use telco networks like those that Verizon provides. But even though this is a positive for Covad, the exact magnitude of the impact is difficult to ascertain, since the financial terms of the arrangement were not disclosed. That lack of clarity didn't stop investors from pushing Covad's stock up 60%. But then again, Covad investors have had little to cheer about. After all, just a few years ago, the company was mired in bankruptcy. And Covad's fundamentals are still worrisome. In the third quarter, the company sustained a loss of $15.8 million, or $0.06 per share, compared with a loss of $13.8 million, or $0.05 per share, in the same period a year ago. It also can't be overlooked that the high-speed Internet access market is fiercely competitive. Telcos aren't the only players. Cable companies are in on the act. Municipalities are offering their own Wi-Fi services. Even electric utilities are beginning to provide high-speed access through their power lines, as seen in Income Investor recommendation TXU's (NYSE: TXU - News) recent deal. With such shaky financial performance, expect the recent surge in Covad's stock price to be temporary. The best news for Covad shareholders would have actually been selling out to Verizon, not striking a partnership deal. Fool contributor Tom Taulli does not own shares mentioned in this article.