Global Crossing Ltd, a company synonymous with the telecommunications industry's rip-roaring boom and humbling comedown, emerged from bankruptcy after nearly two years.
Global Crossing has a new board of directors and new top executives. It has cut its work force in half, moved its main offices from Beverly Hills, California, to Florham Park, New Jersey, and slashed long-term debt to just US$200 million from US$11 billion.
What has not changed much is the company's ability to pump data and long-distance calls around the world for big businesses, governments and other telecom carriers. For example, although Global Crossing lost its ownership stake in a key subsidiary, Asia Global Crossing, it still has deals to use the Asian network, CEO John Legere said.
"The company is performing much better than it ever did before," Legere said in an interview Tuesday.
However, analysts say the conditions that originally ravaged Global Crossing -- namely, too much capacity on telecom networks that cost billions to build -- also haven't changed much.
"I would guess that in the first year, they're going to have a tough time breaking even," said Berge Ayvazian, senior research fellow with the Yankee Group, an analyst firm. "They don't have much margin for error."
Global Crossing spent billions during the telecom and Internet boom building a 160,900km network of undersea cables and fiber-optic lines, but demand failed to materialize as quickly as the company had hoped. The collapse vaporized about US$50 billion of investors' money.
In January last year, Global Crossing filed the largest telecom bankruptcy in history, though WorldCom Inc broke that record only six months later.
In congressional hearings, Global Crossing's ex-chief, Gary Winnick, came under fire for selling US$735 million of stock before the company's fortunes plummeted. The old management team also was faulted for swapping network capacity with other carriers in a bid to pump up revenue.
Federal investigations and lawsuits by shareholders and employees still hang over the company. Legere acknowledged that settling lingering issues would be important "to raise the confidence of future equity holders."
Global Crossing took a step toward closing the door on its past Monday by filing last year's annual report with the Securities and Exchange Commission, in which it restated earnings for 2000 and 2001.
Although Global Crossing declared US$22 billion in assets when it went into bankruptcy, Singapore Technologies Telemedia, which is owned by the Singapore government, was able to buy 61.5 percent of the company for just US$250 million. The Singapore firm also gave Global Crossing US$200 million it used to pay creditors.
Creditors will own the rest of the company, which hopes to return to selling shares on the NASDAQ Stock Market early next year.
Legere said he believes Global Crossing will reap the benefits of the telecom industry's increasing embrace of routing phone calls with a data technology known as voice over Internet protocol. The method is more efficient and enables new communications features.
When Global Crossing filed for bankruptcy, its network was handling 2 million minutes of "voice over IP" traffic every month. That figure is now 2 billion minutes per month -- one-third of all of Global Crossing's voice traffic.
But several other companies are fighting for the same kinds of business because the industry never went through the significant consolidation that was expected two years ago. Not only is Global Crossing making a new start, but WorldCom, now known as MCI, is expected to do so soon as well.
"It appears that nobody is willing to leave their bar stool," UBS Warburg analyst Uberto Ferrari wrote in a research note Tuesday.
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