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DSL.net Cuts Staff by 141

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.