Corvis Splits for Broadwing

Corvis Corp. (Nasdaq: CORV) announced today that it has changed its name to Broadwing Corp., a final acknowledgement that the company would rather focus on its service provider future rather than its optical networking equipment past.

The company also announced it will perform a 1-for-20 reverse stock split, in order to boost the price per share.

The name change, of course, isn't much of a real change. When Corvis acquired the service provider Broadwing in 2003, it acquired the bulk of its current revenue (see Corvis Completes Broadwing Acquisition and Corvis & Broadwing: Together At Last). Company officials said they're going with Broadwing because it's a bigger brand that best reflects what the company does.

"The company said it found the Broadwing name the most visible brand for the company and one that commands respect in the marketplace," Corvis management states in a press release.

Functionally, the name change makes perfect sense. For the six months ended June 30, the equipment division that used to be Corvis only contributed 2 percent of the company's revenues -- and yet that was the name the service provider division was trading under in the financial markets.

Broadwing Corp. will trade under the BWNG ticker symbol on Nasdaq beginning October 8. The firm will be a holding company for Broadwing Communications LLC, the Austin-based service provider. Broadwing Corp. says it will still have an optical equipment business located right over there in Columbia, Md. That tiny division, which will be called Corvis, will sell mostly to the U.S. government.

Corvis founder David Huber is taking the reins as the holding company's president and CEO, while its service provider chief, Mark Spagnolo, has announced he's quitting after a six-month transition period. Spagnolo has only been at his post a little more than a year, but it was understood that his role would be temporary at the time it was announced (see Broadwing's Got a New Boss).

Corvis -- er, Broadwing -- also announced it will perform a 1-for-20 reverse stock split, whereby investors will have to trade 20 shares for one new share. Companies tend to do reverse stock splits to make their shares look more valuable and avoid delisting. Also, many institutional investors, such as some mutual funds, can't buy stocks under $5, so a reverse stock price -- which should boost the share up into the high teens -- might open up the company to new investors.

Broadwing Corp. says it will pay a dividend following the stock split. The stock dividend affects all Corvis/Broadwing Corp. shares, stock options, and warrants outstanding on the record date.

Investors weren't too terribly impressed with the announcement. Corvis shares dropped $0.08 (8.08%) to $0.91 in early afternoon trading on Wednesday.

— Phil Harvey, News Editor, Light Reading

goundan 12/5/2012 | 3:18:04 AM
re: Corvis Splits for Broadwing Bye bye optics. Bye bye Bannantine. This is the real end of the road for whatever optical pretensions and mushroom popping psychidelic illusions Huber had. Did he run out of mushrooms or did he suddenly have a revelation that brought him back to earth?


Broadwing Corporation Explores Strategic Alternatives for its OCS Product and Announces Management Changes
Friday April 22, 4:15 pm ET

COLUMBIA, Md.--(BUSINESS WIRE)--April 22, 2005--Broadwing Corporation (Nasdaq:BWNG - News) today announced that it intends to explore strategic alternatives for its Optical Convergence Switch (OCS) digital cross-connect product, including a potential sale of the product, to enable the Company to increase its focus on its telecommunications services business. The OCS digital cross-connect switch provides standard point-to-point, ring and mesh networking functionality that enables delivery of SONET/SDH services and is sold by the Company's communications equipment division. Broadwing Corporation previously reported that its equipment sales, primarily to the U.S. government, contributed approximately 2% to consolidated company revenue in 2004.

The Company also announced that Jim Bannantine, who served as President of the Company's equipment business prior to its acquisition of certain assets from Broadwing Communications Services, Inc. and who served as President of Broadwing Corporation, has resigned in order to pursue other interests. In addition, the Company named Scott Widham, currently President-Carrier Accounts, to the new position of President of Sales, which merges oversight of the previously separate Carrier Accounts and Enterprise Accounts sales operations.

"On behalf of Broadwing, I would like to thank Jim Bannantine for the contributions he made during a period of rapid change and growth for the Company," said Dr. David Huber, Chairman and Chief Executive Officer of Broadwing Corporation. "Jim aided greatly in the transition of our business from a telecommunications equipment manufacturer to a communications services provider. Our decision to explore strategic alternatives for our OCS product is reflective of the change in our corporate focus and we would like to thank Jim for all of his excellent work in positioning Broadwing for success going forward."

During Bannantine's tenure, Broadwing also completed the acquisition of Focal Communications Corporation. The Company recently announced that it has successfully connected Focal's local network assets with Broadwing's all-optical long haul network.

Commenting on Scott Widham's new role, Dr. Huber said, "Scott Widham has been responsible for cultivating and growing Broadwing's relationships with all carrier and wholesale providers and that business has flourished under his leadership. We are pleased that Scott will bring his enthusiasm and energy for our business to the Enterprise Group."

Widham has over 25 years of international and domestic experience in the telecommunications and cable industries. He was recently appointed to the Board of Directors of CompTel/ALTS. Prior to joining Broadwing, Widham was the owner and operator of Capital Cable, a multi-system operator that was subsequently sold to Charter Communications. Widham also served as an executive vice president of Corecomm and was a director at MTV networks. He earned a BBA from The University of Texas at Austin.
Reindeer 12/5/2012 | 1:14:07 AM
re: Corvis Splits for Broadwing Dave, we meet again in cyberspace. Please provide some marvelous words of wisdom and business acumen to this recent announcement. I am breathless in anticipation.

newbee2002 12/5/2012 | 1:14:06 AM
re: Corvis Splits for Broadwing stock price is effectively doubled :)
corvo 12/5/2012 | 1:14:00 AM
re: Corvis Splits for Broadwing i don't see how the shareholder could gain anything. each shareholder will have twice as many shares worth half the predividend value. it will only be a pretext for removing 250m from the company's reserve.
devolutionist 12/5/2012 | 1:13:59 AM
re: Corvis Splits for Broadwing a reverse stock split nets you zero. if you have 20 shares worth $1 that changes into 1 share worth $20. doesn't matter if the stock price doubles - or in this case x20's, because net value's the same.
SIVROCX 12/5/2012 | 1:13:58 AM
re: Corvis Splits for Broadwing LetGÇÖs do the math. It took Corvis 4 years to drive the IPO stock price from $36 to $0.90. That is 36/$.9 or a 40X reduction in value (forget the high of about $110 and a low of $0.50). If we get 10 for 1 then the new shares should be about $9 per share. At DaveGÇÖs rate of return I look forward to my shares getting back to $0.90 in about one year. Boy do I know how to pick a growth stock or what. I will be working until, well forever if I were dependent on my Corvis stock. Excuse me but I must return to my prayer closet and ask for that miracle again. +£
DCITDave 12/5/2012 | 1:13:55 AM
re: Corvis Splits for Broadwing From a source at Corvis:

"We are doing a 1:20 reverse, followed immediately with a 1:1 forward split or stock dividend. The net is a 1:10 reverse."

The source says 100 shares at $1.00 equals 5 shares at $20.00 after the reverse, which equals 10 shares at $10.00 after the 1:1 stock dividend.

"Objective is to get stock in appropriate price range, around 10.00... "

materialgirl 12/5/2012 | 1:13:52 AM
re: Corvis Splits for Broadwing The only issue that really matters is whether or not Broadwing, Corvis, or anyone else can use this super duper optical network to generate positive cash flow. They need to compete successfully with LVLT (who perhaps should be called Level One) for wholesale transport. If the CORV gear is so great, they should be able to provide high quality, high capacity transport so cheaply as to generate cash with all of this movement to VoIP et all.
airjet 12/5/2012 | 1:13:36 AM
re: Corvis Splits for Broadwing Since following this stock for the past 3 years, I have been shocked over the fact that Huber could not see this coming. It is a proven fact that companies with less than $5 per share are not on radar screens of Mutual funds. Maybe this will be the miracle we stockholders need. I hope so. I also hope that Broadwing will "breakout" like Infospace did years ago, after their reverse split. Any comments?
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