[Vancouver, BRITISH COLUMBIA] 360networks Inc. released a profit warning late yesterday gaining the dubious distinction of being the next major Canadian tech firm — after Nortel Networks and JDS Uniphase – to stumble under the burden of a sharp slowdown in the telecommunications sector.
The Vancouver-based fiber-optic network builder reported a major loss Thursday evening and said it is reducing its forecasts for profit, revenue and capital spending for this year.
360 Networks said it lost $355-million (all U.S. figures) or 55 cents a share for the year ended Dec. 31, compared to the year before when the company posted a profit of $24-million and revenue rose 42 per cent to $511-million. The company said it lost $155-million in the fourth quarter of 2000, or 20 cents per share. The company’s fourth-quarter revenue was $158-million, an increase of 26 per cent from $125-million a year ago.
360networks revised its gross profit forecast to $1.9-billion down from $2.6-billion. The company reduced its 2001 revenue forecast from $3.3 billion to $2.6 billion. And the network builder said it is cutting its capital spending to $4-billion for 2001, down from earlier estimates of $4.5-billion.
The company made its initial forecast last November.
The profit warning is a result of a sharp slowdown in the Internet-technology sector and the flight of investors from tech stocks, the company said in a statement. As a result, 360networks said it fears its customers won’t be able to pay their bills. However, the new climate hasn’t hurt the company’s demand, added Greg Maffei, 360networks’ president and chief executive officer. He said despite the tough market, there is still a strong demand for the company’s global network services.
“Most importantly, we sold network services to a growing number of industry leaders like Deutsche, PacWest and Q9,” he said.
The company, which spun out of an Edmonton construction firm that specialized in laying fiber-optic cable, has become a major builder and operator of global fiber-optic networks. 360networks said it plans to have a 142,000-kilometre global network in operation by 2002, serving clients in 100 cities. In the near term, however, 360networks has to contend with its tumbling stock, which fell 14 per cent Tuesday and more than six per cent Wednesday. The stock dropped just over two per cent Thursday, in total losing more than 25 per cent of its value during the week.
