Covad Communications Group Tuesday released financial sheets to Nasdaq which show the broadband provider reduced 2000 revenues by $52 million and increased losses by another $17 million.
Officials also said cost-cutting efforts, in the form of staff cuts, are going to cost a little more than anticipated.
Late last year, officials had said the company would incur $20 million in restructuring charges. That figure has been significantly expanded and ranges anywhere from $50-$100 million.
Trading on the broadband provider’s stock was frozen by the national exchange Friday until the Covad could provide the needed information. Trading resumed early this afternoon.
Wall Street’s answer was no surprise: investors gashed the stock
44 percent, to close at 1 5/8, following downgrades by some of the industry’s investment firms.
It’s uncertain if Covad will be able to weather the storm of broken investor and customer confidence. Despite large losses in 1999 and 2000, the company posted a stellar $66 5/8 per share rate last year at this time.
It wasn’t until late last year, when officials revised third quarter earnings and dumped Chief Executive Officer Robert Knowling for interim Chief Executive Officer Frank Marshall, that cracks started appearing in the provider’s rosy image.
The revised earnings came at the hands of the Internet service providers it was wholesaling digital subscriber lines, who were not able to pay the bills. A combination of heady expectations and provisioning problems are to blame for the subsequent Chapter 11 filings by these ISPs.
It left Covad in a quandary, since the company was still required to pay for the lines it provisioned from the telcos. To meet costs, Covad announced a sweeping array of cost-cutting measures, from across-the-board staff cuts to cutbacks in central office deployments.
Which left customers in a bind. Many consumers were left adrift after their Internet provider went bankrupt and out of business, prompting Covad to initiate a Safety Net program to keep them online.
It’s a move that’s left Covad in a bind, also. As of today, the company owes customer’s about $15 million in credit, with the possibility that more is due.