Broadwing reorganizes, cuts staff
The company, which provides telecom services to other businesses, will close six sales offices to concentrate on its top markets and will exit its construction business.
The company, which provides telecommunications services to other carriers and businesses, will close six sales offices to concentrate on its top 30 markets and will also exit its construction business, which mostly built networks for other carriers.
The restructuring will result in the layoff of 900 people, or 15 percent of its staff. The company also named CFO Kevin Mooney to the newly created position of chief operating officer.
Carriers have been hit hard over the past few months as investors have become more anxious over the health of the telecommunications industry. Broadwing said in October that the slowing economy will make the rest of 2001 challenging and that the company would continue to aggressively manage its costs. The company's stock now trades around $10 a share, down from its high of $28.87 over the past 52 weeks.
"There are some fundamental issues that need to be addressed, as was shown by the last quarter, and hopefully the reorganization will meet those issues," said James Linnehan, an analyst at Thomas Weisel Partners.
Broadwing reported a net loss of $30.5 million, or 14 cents a share, in the third quarter compared with a loss of $25.9 million, or 12 cents a share, a year ago. Revenue climbed to $598 million from $531 million a year earlier, though it slipped from $608 million in the previous quarter.
Linnehan added that the company is facing problems related to the general downturn in the telecommunications industry along with the difficulties of not being an established player in the sector. He believes the company must find ways to squeeze out more growth in new and existing businesses to move forward.
Broadwing said the reorganization will result in a charge between $250 million and $300 million during the fourth quarter, and the company still plans to have a positive cash flow by mid-2002.
The Cincinnati-based company will consolidate its Web-hosting customers from 11 facilities into three centers based in Cincinnati; Austin, Texas; and Newark, Del.