Global Crossing loss in line

May 9, 2001: 6:00 p.m. ET

High construction costs weigh on fiber-optic networker's bottom line

NEW YORK (CNNfn) - Global Crossing Ltd. posted a first-quarter operating loss that was narrower than expected on revenue that rose more than 20 percent from the same period a year earlier.

After the close of trading, the company -- which operates or is building 12 regional fiber-optic networks connecting Asia, the Americas and Europe -- said its continuing operations lost 76 cents per share during the quarter, excluding extraordinary charges and the cumulative effect of a change in accounting.

Analysts had generally expected to company's operating loss to be 88 cents per share, according to a survey conducted by earnings tracker First Call. During the same quarter last year, the company lost 45 cents per share.

At $1.1 billion, Global Crossing's first-quarter revenue for continuing operations rose 21 percent from the $906.6 million it reported during the same quarter a year ago, and also was in line with analysts expectations, according to the First Call survey.

The company's results for continuing operations exclude its ILEC business, which it has agreed to sell to Citizens Communications for $3.5 billion in cash, and GlobalCenter, which it sold to Exodus Communications in January.

Now operating mainly in North America and Europe, Global Crossing provides: local, long-distance, and international phone service; Internet access; and data transport and network capacity.

"We are extremely pleased with our strong first quarter results, which reflect our continuing transformation from a carrier's carrier to a value-added telecommunication services provider," Tom Casey, the company's chief executive, said in a statement.

"We continue to leverage the competitive advantages of our global network and increasingly strong sales team to expand and diversify our revenue streams," Casey added. "Our commercial services segment performed particularly well, with sequential growth of 12 percent in commercial data services.

The company's discontinued operations, consisting of its ILEC and GlobalCenter segments, reported revenue of $191 million for the first quarter.

Much of the decline in Global Crossing's bottom line can be attributed to the high cost of building its undersea and land-based communications networks. The company's total operating expenses during the first quarter were $1.6 billion, up 31 percent from $1.07 billion during the same quarter a year ago.

Global Crossing on Wednesday reaffirmed its previously announced plans for capital expenditures of roughly $10 billion in the aggregate for 2000 and 2001, saying it expects these outlays will be offset by a combination of network efficiencies, use of existing inventories, lower-than-planned prices from vendors, and spending at slower than budgeted rates.

Capital spending for continuing operations during 2001 is expected to remain approximately $4.9 billion-to-$5.1 billion, an amount that includes approximately $1 billion of previously announced capital spending from the 2000 capital program for which payments will be made in 2001.

The company said its core network is now operational over 88 percent of its planned 100,000 route miles, reaching 27 countries and more than 200 major cities.

Shares of Global Crossing (GX: Research, Estimates) rose to $14.50 on the Instinet electronic platform after closing at $13.80 on the New York Stock Exchange.