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Genuity Staves Off Delisting

Genuity shareholders and directors overwhelming approved a 20-to-1 reverse stock split to stave off delisting, which would be a serious blow to its restructuring effort.

The measure carried 96 percent of the vote at the Woburn, Mass., Internet infrastructure maker's annual meeting. Adjusted shares begin trading May 30. Subsequently, Genuity will have approximately 11.1 million shares of common stock outstanding.

"Our board is implementing the reverse stock split so that we will meet the minimum price requirements for listing on the Nasdaq," said chairman and CEO Paul R. Gudonis.

Market officials begin delisting procedures when a company's stock fails to close above $1 per share for 30 consecutive trading days. This morning GENU languished around 63 cents per share and has a 52-week range of 59 cents to $3.74. Reducing the number of shares outstanding raises the value of those remaining.

For Genuity, whose business includes Internet access, network security and Web hosting, it's the latest in a series of steps to recover after a year-long economic slump caused customers to delay or cancel large IT projects.

Earlier this month, the company said it would slash up to 1,200 jobs, 29 percent of its workforce, to cut overhead.

Genuity, which counts Verizon Communications as a minority stakeholder and customer, is also mulling closing more U.S. data centers and administrative offices. Internationally, it will exit the professional services business in France, Italy and Spain, and is evaluating the "ongoing profitability potential of all international operations."

In the second half of 2001, Genuity axed 990 workers and quit the wholesale dial-up business.

The reverse stock split will buy Genuity time. For their part, shareholders hope it is enough to allow cost-cutting measures to help the bottom line and for business to pick up.