Nasdaq warns it may unplug Covad

The high-speed Net service provider gets a warning that its shares may be pulled off the exchange because it failed to file adequate paperwork to regulators.

High-speed Internet service provider Covad Communications on Monday said that it has received a delisting letter from Nasdaq warning that its shares may be pulled off the exchange because it failed to file adequate paperwork to federal finance regulators.

The Santa Clara, Calif.-based company will request a hearing later this see story: Find a broadband provider week with officials of the Nasdaq stock exchange regarding its stock listing status, after which Nasdaq will make its final decision. Covad said that it expects to file its Securities and Exchange Commission form 10-K and all results for its fiscal year 2000 in the week of May 7.

The 10-K is the standard annual report in which a company provides a comprehensive overview of its financial results for a given year. The filing is due 90 days after the close of the company's fiscal year.

In a statement, Covad said that it has been slow to file its required paperwork to the SEC because of "accounting complexities caused by the rapid growth in our business and the financial difficulties experienced by some of our ISP partners in 2000."

The delisting warning comes as providers of DSL (digital subscriber line) technology, which allows high-speed Internet service over ordinary telephone lines, have shown very public signs of their struggle to stay alive. Earlier this month, Rhythms NetConnections also got a warning from Nasdaq that it may be delisted and said it plans to start putting some of its assets up for sale.

In one of the most striking signs of problems in the DSL market, NorthPoint last month abruptly shut down its service, leaving thousands of customers without high-speed services after it laid off 700 employees.

Covad said that it plans to take the extra time to go over the financial details of the past year in order to "help ensure confidence in its financials and accounting methods."

The company's stock closed Friday at $1.39.