Covad Communications Group officials
aren’t concerned with the delisting warning sent by NASDAQ Monday morning.
The troubled digital subscriber line provider continues
trading on NASDAQ, with a revised trading ticker symbol.
The notice by NASDAQ warns that failure to respond to the notice will result
in a halt in trading on the index.
Covad officials said they have requested a hearing from NASDAQ’s board of
inquiry in regards to the delisting notice, which they say takes about 45
business days. Officials said they plan to release fourth quarter 2000
figures the week of May 7, giving them plenty of time to file before they
could be delisted.
Chuck McMinn, Covad chairman, said the company’s rapid growth is making it
difficult to wrap up 10-K filing to the stock index, and they are taking
their time to get it done right.
“We are taking the extra time that is necessary for a full review of
previously discussed issues,” McMinn said. “Taking this time will help
ensure confidence in our financials and accounting methods in the investment
community while we continue to successfully provide an expanding suite of
broadband services to grow our customer community.”
If Covad were to be delisted, the news would carry grim implications for the
future of DSL in the marketplace.
NorthPoint Communications was similarly delisted by
NASDAQ weeks before going out of business, stranding more than 100,000 DSL
customers nationwide.
According to Martha Sessums, Covad spokesperson, the situation with
NorthPoint bears no resemblance with her company’s financial situation,
assuring customers that they won’t go out of business anytime soon.
“No, there is no comparison,” Sessums said. “As stated before, we have
enough cash in the bank to last us through the first quarter of 2002 and we
are working on raising the comparatively small amount of money that we need
to get us to profitability.”
According to McMinn, trouble getting some of its Internet service providers
to pay for the lines it provisioned has also created a snarl in the
company’s bottom line.
Last week, Covad was granted permission by the U.S. Bankruptcy court to take the DSL customers of
high-speed ISP Zyan Communications, which had defaulted on its payments to
Covad.
The cash buyout doesn’t provide immediately financial relief for the
company, however. The ruling calls for debt forgiveness and could even
exacerbate Covad’s financial situation, since the provider would be forced
to pay Zyan for every customer that migrates to Covad’s Safety Net program.
