I am slightly anxious about XO, they bought up my telecom co.: Allegiance, and if they fold as well, we might have to move. We have consolidated our phones and data both, and reconfiguring would figure to be a real biatch. SBC sucks, and their DSL service was such a joke we only lasted less than a month before switching to Allegiance.
From X-Change:Analysts: XO Results Disappointing
XO Communications Inc. Chief Executive Carl Grivner said this week the telecommunications company met its expectations in the third quarter, but a Wall Street research firm expressed doubt XO is fully funded.
XO reported a net loss of $134.1 million through the first nine months of 2004 and its cash balance has essentially been cut in half since the beginning of the year. XO, a national phone and data carrier to businesses, had $237.4 million in cash and cash equivalents as of Sept. 30, down from $478.6 million at the end of last year.
The company listed long-term debt of $354.1 million and accrued interest of $4.8 million as of Sept. 30, but XO does not need to make payments on its credit facility until 2009.
Still, Needham & Co. analysts say XO may no longer be fully funded. XO has promised to realize savings through the acquisition of Dallas-based Allegiance Telecom Inc., but analysts say integration of the companies is proving more difficult than anticipated.
“This company doesn’t look like they are anywhere close to the plan of integrating Allegiance and getting $150 million of synergies,” says Needham & Co. analyst Vik Grover.
Grover, who recommends a “hold” on XO shares, said XO is not generating sufficient EBITDA. XO reported consolidated EBITDA of $20.5 million, but the company noted settlements of disputes with other carriers and one-time adjustments improved its net loss and EBITDA by approximately $15 million. Excluding carrier settlements, Needham & Co. expected XO to generate EBITDA of $7 million, compared to actual results of $5.5 million. Grover says Allegiance alone was generating more than $5 million in monthly EBITDA.
“It’s not over but these guys have serious challenges,” Grover says.
