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Press Release Source: Covad Communications http://biz.yahoo.com/bw/021106/60409_1.htm Covad Communications Group Announces Third Quarter and Nine-month Results Wednesday November 6, 4:12 pm ET - Gross Margin Increases to 29.2% versus 23.6% in Second Quarter - - Company Signs New Wholesale Partners during Quarter - SANTA CLARA, Calif.--(BUSINESS WIRE)--Nov. 6, 2002-- Covad Communications Group, Inc. (OTCBB:COVD - News) today reported results for the third quarter and nine months ended September 30, 2002. Revenue was in line with guidance at $96.2 million and EBITDA was ahead of guidance at a loss of $14.7 million. Gross margin grew to 29.2 percent from 23.6 percent for the second quarter of 2002. Net loss was $51.7 million or $0.23 per share. Cash and investment balances, including restricted cash, as of September 30, 2002 were $228.7 million, representing a net cash usage of $17.1 million for the quarter. Line count increased to approximately 359,000 during the third quarter. "We are executing our plan and believe that we turned the corner on line count during the third quarter. We continue to focus on controlling costs, prudent use of cash, and marketing and sales programs that will drive demand for broadband services and increase Covad sales," said Charles Hoffman, Covad president and CEO. "We are strengthening our distribution channels as evidenced by the wholesale agreements signed during the quarter and our direct channel performance continues to be strong. Our new marketing programs are beginning to show results and we believe the awareness created by our campaigns will have a lasting impact on our business and will continue to generate greater recognition of the benefits of broadband services in the marketplace." Highlights Covad`s direct channel continued to grow. The number of direct lines grew quarter over quarter by 18 percent and now represents approximately nine percent of total lines in service and over 14 percent of total company revenues. Covad continued the extension of its network, expanding coverage in the current 94 Metropolitan Statistical Areas (MSAs) served, and ending the third quarter with approximately 1750 central offices in service. Covad redesigned its Alliance Program, which now has over 700 affiliates selling Covad DSL services across the country. Wholesale partnerships: America Online penned a five-year agreement providing it with the ability to purchase wholesale DSL consumer services throughout Covad`s nationwide network. Covad anticipates it will begin to receive orders in the fourth quarter of 2002. Sprint signed an agreement to distribute Covad`s DSL access services in selected markets to Sprint`s business customers. Sprint began placing orders in August of 2002. Expanded relationship with EarthLink to include additional consumer services that Covad expects EarthLink will begin offering late in the fourth quarter of 2002. Launched the "Popularizing Broadband" campaign focused on programs, promotions and advertising to promote Covad services and educate consumers about the benefits of broadband access: Launched the "Power to the People" TV campaign in San Francisco and Washington DC to increase consumer awareness of Covad`s direct broadband Internet access services. Commenced direct small business marketing in select markets with print and radio campaigns, which are expected to continue into the holiday season. Launched introductory rates for our TeleSurfer services that are competitive with dial-up rates. Hoffman continued, "During the fourth quarter, we will continue building brand recognition in the marketplace, while also focusing on gross margin improvement and churn management. The marketing campaign for our direct business will target small business customers who tend to generate the best margins. We are working extensively with our wholesale partners to develop programs that will generate line growth and reduce churn. In both distribution channels, we are showing modest improvement in churn, which continues to be a major focus for us." Operating Statistics Average revenue per unit (ARPU) remained solid at approximately $61. The quarter-end aggregate unrestricted and restricted cash, cash equivalents and short-term investments balances of $228.7 million reflected capital expenditures of approximately $5.1 million and lower than expected net cash usage of $17.1 million. Line count reached approximately 359,000 as of September 30, 2002. Churn during the quarter was approximately four percent. Business subscribers represented 49 percent of line count and the consumer service represented 51 percent, a slight shift from an even mix last quarter. Approximately nine percent of Covad`s total lines are served through resellers for whom Covad recognizes revenue only when it is paid, down from approximately 11 percent at the end of the second quarter of 2002. Third Quarter Financial Results Revenue for the quarter ended September 30, 2002 was $96.2 million, an improvement of over 13 percent when compared to $84.8 million for the third quarter ended September 30, 2001, and down slightly from $97.7 million for the quarter ended June 30, 2002. The company`s wholesale channel contributed $82.3 million or 85.6 percent of revenue while the direct channel contributed $13.9 million or 14.4 percent of revenue during the quarter ended September 30, 2002. Network and product costs were $68.1 million for the third quarter of 2002, a 34.1 percent decrease from $103.3 million for the third quarter of 2001, and an 8.8 percent decrease from $74.7 million for the second quarter of 2002. For the third quarter of 2002, gross margin was 29.2 percent, an increase from negative 21.8 percent from the third quarter one year ago and an increase from 23.6 percent for the quarter ended June 30, 2002. Sales, marketing, general and administrative expenses were $42.6 million for the third quarter of 2002, compared to $46.6 million for the third quarter of 2001 and $35.4 million for the second quarter of 2002. The increase from the second to the third quarter is largely attributable to the company`s launch of its "Popularizing Broadband" campaign. EBITDA for the quarter ended September 30, 2002, was a loss of $14.7 million, compared to a loss of $70.2 million for the quarter ended September 30, 2001 and a loss of $7.3 million for the quarter ended June 30, 2002. The increase in EBITDA loss from the second to the third quarter also reflects the increase in marketing expenses in the third quarter as well an increase in non-cash litigation-related expenses, offset by the improvement in network and product costs described above. Operating loss for the third quarter of 2002 was $51.9 million, compared to $108.1 million in the third quarter of 2001 and $39.5 million in the second quarter of 2002. Covad`s net loss for the third quarter of 2002 was $51.7 million or $0.23 per share, compared to a net loss of $139.7 million or $0.79 per share for the third quarter of 2001, and a net loss of $40.8 million or $0.19 per share for the second quarter ended June 30, 2002. The net loss for the three months ended September 30, 2002 includes charges that should have been recorded in prior periods. These charges consist of additional depreciation expense of $9.6 million related to changes in Covad`s network configuration, which necessitated a reduction in the remaining estimated useful lives of certain assets, and a charge to network and product costs of $1.2 million related to the capitalization of certain network and product costs that should have been expensed. Mark Richman, Covad`s chief financial officer, stated, "During the quarter, we devoted resources to our marketing programs as reflected by the increase in sales, marketing, general and administrative expenses for the quarter. We anticipate our marketing investments will generate continued line count growth in the fourth quarter, with revenue improvements to begin in the first quarter 2003. We continue to maintain a cost discipline that allows us to focus resources on funding growth." Year-to-date Financial Results Revenue for the nine months ended September 30, 2002 was $295.6 million, up from $243.1 million for the nine months ended September 30, 2001. The company`s wholesale channel contributed $254.3 million or 86.0 percent of revenue while the direct channel contributed $41.4 million or 14.0 percent of revenue during the first nine months of 2002. Network and product costs were $231.6 million for the nine months ended September 30, 2002, down from $359.9 million for the comparable period in 2001. Sales, marketing, general and administrative costs were $116.6 million, down from $168.7 million for the same period in 2001. EBITDA loss was $43.9 million for the nine months ended September 30, 2002, compared to a loss of $311.5 million in the same period in 2001. EBITDA loss for the nine months ended September 30, 2002, includes a $9.0 million non-cash recovery for litigation expenses, while the EBITDA loss for the comparable period in 2001 included $25.5 million of expenses related to restructuring, asset impairment and litigation. Covad`s net loss for the nine months ended September 30, 2002 was $149.3 million or $0.68 per share, compared to the net loss of $513.7 million or $2.94 per share for the nine months ended September 30, 2001. Business Outlook Covad currently expects revenue for the fourth quarter to be in a range of $92 million to $95 million with continued subscriber growth. The results for the first nine months of 2002 include revenues from certain cash basis customers for services provided and payments made in prior periods that are not anticipated during the fourth quarter of 2002. For the fourth quarter of 2002, the company expects EBITDA loss to be in a range of $25 million to $30 million and cash usage to be approximately $30 million, including capital expenditures. Based on the results for the first nine months of 2002, the anticipated results for the fourth quarter and the related timing of subscriber growth, Covad expects to reach EBITDA positive in the second half of 2003 and cash flow positive, including cash for capital expenditures, in mid 2004. The change of approximately six months is largely related to slower than anticipated subscriber growth. Despite the change in guidance, Covad continues to believe that it has a fully funded business plan. -------------------------------------- Gab viele kritische Stimmen wegen der Ergebnisse. Ich fand jedoch positiv, daß die Betriebskosten gesenkt werden konnten und so jetzt mehr Geld für Werbung bleibt. Außerdem beginnen die neuen Partner wie Sprint und AOL erst im vierten Quartal mit ihren Aktivitäten, sind also noch kaum berücksichtigt. Go Covad! Grüße an alle! |
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| aus der Diskussion: | Covad - Himmel oder Hölle |
| Autor (Datum des Eintrages): | Bannerman (07.11.02 11:04:13) |
| Beitrag: | 75 von 149 (ID:7785062) |
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