Global Crossing Sales Fall; Turnaround Still Expected
Despite posting a small but crucial gain in service revenue, Global Crossing Ltd. said Thursday that overall sales fell and its net loss rose nearly 14% in September compared with the previous month.
The Bermuda-based company, which filed for bankruptcy protection in January, said the results show that Global Crossing is meeting its projections and is on track to emerge from Chapter 11 proceedings at the end of the year.
The communications network operator acknowledged that it still faces challenges, but Chief Executive John Legere said, “We continue to execute a full-scale turnaround of the business.”
In its monthly operating report for September, Global Crossing said it lost $157 million, or 17 cents a share, an increase from a loss of $138 million, or 16 cents, in August. Sales totaled $254 million, down from $255 million the previous month. The unaudited report includes the financial results of the company’s subsidiary Asia Global Crossing, a separate company that is facing its own cash crunch but is not part of Global Crossing’s bankruptcy filing.
Global Crossing, which had executive offices in Beverly Hills, said its revenue from telecommunications and data services -- a category vital to the company’s future -- rose for the second month in a row, totaling $237 million, up from $236 million in August. Reflecting its continuing review of sharply devalued assets, the company also reiterated its plan to write down the value of its worldwide fiber-optic network by about $10 billion.
But Global Crossing also slashed income projections for 2003, expected to be its first year out of bankruptcy. In a recent court filing, Global Crossing reduced its net-income estimate to $73 million, down from an earlier estimate of $174 million for 2003.
Since filing for bankruptcy, Global Crossing has been trying to wean itself from its heavy reliance on large multi-year sales of network capacity to other telecommunications carriers. Those sales boosted Global Crossing’s revenue over the years, but they have become problematic now that the market for long-term deals has evaporated and the accounting behind them has been discredited by the Securities and Exchange Commission.