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Covad second-quarter loss narrows

The embattled high-speed Internet access company that aims to crawl back from bankruptcy reports an operating loss of $142 million.

Covad Communications, the embattled high-speed Internet access company that aims to crawl back from bankruptcy, reported on Monday a lower second-quarter operating loss when compared with last year.

For the second quarter, the Santa Clara, Calif.-based wholesale DSL (digital subscriber line) provider reported an operating loss of $142 million on revenue of $87.1 million. That compares with an operating loss of $153 million on revenue of $43.2 million for the same quarter a year ago.

Included in the latest quarter's operating results are a $2.9 million restructuring charge and a $2.2 million goodwill item. The company's second-quarter net loss mushroomed to $175 million, or $1.01 a share, from last year's $153 million, or $1.00 a share.

No per-share analyst estimates were available from First Call.

Covad announced last week that it had finalized bankruptcy plans with bondholders that eliminated its $1.4 billion debt in exchange for giving bondholders an equity stake and a cash payout.

Looking ahead, the company predicted little to no revenue growth for the third quarter, but said it expects lower operating losses through restructuring. Covad also needs an additional $200 million in funding.

Covad managed to grow its customer base during the quarter, but at a lower rate. The company finished the quarter ended June 30 with 333,000 subscribers versus the March quarter's 319,000, a 4 percent increase. This compares unfavorably with the first quarter's 16 percent subscriber growth rate from the preceding quarter.

The company attributed the drop to its efforts to switch customers over from defunct Internet service provider partners and its discontinued BlueStar subsidiary.

Covad also reported $524 million in cash and cash equivalents at the end of the June quarter, compared with about $870 million at the end of last year.