|
|
[See References]
Joe St Sauver, Ph.D.
Director, User Services and Network Applications
joe@oregon.uoregon.edu
In a Fall 2001 Computing News article prepared September 5th, we stated that
"for the first time major Internet infrastructure companies--companies
with tangible physical assets such as fiber optic networks and network hardware
devices--are also experiencing widespread financial problems."
Since then, financial circumstances for major Internet carriers have not materially
improved, and the following casualties have been added to the list:
- Excite@Home (ATHM), the broadband Internet provider, filed for Chapter
11 bankruptcy on October 1, 2001.
- Exodus, the major web hosting company, filed for Chapter 11 bankruptcy
on September 26, 2001.
- Genuity (NasdaqNM:GENU), one of the largest Internet backbones, saw
Standard and Poors downgrade their debt to "BB" (below investment
grade) on March 15th, and shares in Genuity closed at $0.85 on April 4, 2002.
- Global Crossing (NYSE:GX), a major international network carrier,
filed for bankruptcy on January 28 and announced on February 8 that it's being
investigated by the SEC.
- Globix (formerly NasdaqNM:GBIX), a large web hosting company, filed
for Chapter 11 bankruptcy protection on January 14, 2002.
- McLeod (MCLD), a facilities-based telecommunications provider with
more than 31,000 route miles of fiber, filed for Chapter 11 bankruptcy protection
on January 31, 2002.
- Metromedia Fiber (NasdaqNM: MFNX), a major metropolitan fiber network
provider,is now down to $0.079/share as of 4/4/2002 after the company defaulted
on several outstanding notes.
- Nippon Telephone and Telegraph (NYSE:NTT) announced that it expects
to post the biggest loss ever by a Japanese nonfinancial company, reportedly
amounting to 865 billion yen (US$6.52 billion).
- Qwest's (NYSE:Q) reported $4 billion in net losses for 2001 and announced
it may take accounting charges of $20 to $30 billion; it's now also under
SEC investigation.
- XO Communications (formerly XOXO), another metro fiber network provider,
reportedly said at the end of March that it may file for bankruptcy protection
"in the very near future."
- Yipes, a facilities-based metro ethernet provider, filed for Chapter
11 bankruptcy on March 21st.
On the bright side, some of the financially troubled network infrastructure
companies we flagged last September have successfully consolidated their operations
under new ownership with minimum disruption. For example, Cable and Wireless
completed its purchase of a majority of Exodus' assets this February, and PSINet
has been successfully acquired by Cogent Communications. Here in Eugene, ATT
Broadband has successfully migrated Excite@Home customers to its operations,
while other providers have assimilated Excite@Home broadband customers in their
regions.
Although so far the Internet as a whole has generally continued to perform
smoothly, we urge you to remain aware of potential operational impacts of carrier
financial problems.
Disclaimer: The above market note should not be considered investment advice. If you're considering buying or selling any financial instrument, we urge you to seek qualified investment advice before proceeding.