DSL.net, Inc., a direct provider of high-speed data communications and
Internet solutions, is the latest ISP to take a hit this week. The company
cut its workforce by 28 percent Friday to reduce expenses and raise capital.
The ISP fired 141 employees as part of a comprehensive plan to reduce
spending levels and to extend the time frame it needs to raise additional
capital, according to Keith Markley, president and COO.
“Since joining the company in November, I have focused my efforts on
improving efficiency in our operations, reducing spending levels and growing
revenue,” he said. “The decision to reduce workforce was made in conjunction
with our decision to slow down deployment of our network of new territories
and then focus on continued revenue growth and quality customer care.”
Total revenue for the third quarter of 2000 was $5,861,000, representing
a sequential increase of 55 percent when compared with the quarter ended
June 30, 2000. The company ended the quarter with 9,208 DSL lines installed.
At that time, David F. Struwas, chief executive officer of DSL.net,
stated, “We are disappointed in this quarter’s results. A portion of our
difficulty was related to decisions we made against the backdrop of the
Verizon strike. Due to concerns regarding installing and servicing customers
in the Verizon areas, we shifted our sales focus to alternate geographies,
and lost momentum as a result. The quarter’s results were also particularly
impacted by management’s decision to limit direct mail marketing, and by
further re-alignment of the sales force territories.”
As a consequence, the company forecasted that fourth quarter revenues
will be in the range of $7.0 to $7.5 million and EBITDA loss will be
approximately $25 to 26.5 million.
The past few weeks have not bode well for ISPs. Most recently Covad cuts its
workforce by 400 while NorthPoint restated its quarterly revenue to $24 million from $30 million.
Markley noted that Friday’s measures were precautionary. “While we have a
strong balance sheet with minimal debt, the actions we are taking are
designed to proactively prevent the financial difficulties other
Internet-related companies are experiencing in today’s market climate,” he
said. “We are developing a comprehensive plan to keep us positioned for
continued growth while we also pursue further reductions in spending aimed
at network cost and process efficiencies.”
As a result of today’s actions, DSL.net expects to realize about $8
million in personnel expense savings in fiscal 2001 and to incur a one-time
restructuring charge of no more than $1 million in fourth quarter 2000.
