Cogent Investors Ante Up (Again)
The Cogent investors traded preferred shares for new common ones and bought several kinds of newly issued preferred stock to complete the transaction. With their help, and Cisco's benevolence, Cogent has cut its debt to its largest equipment supplier to about $17 million from $262.8 million (see Cisco Powers Cogent's Restructuring).
James Wei, a WorldView founder, acquired 10,000 of Cogent's new Series G shares, each of which equals about 5,795 shares of common stock, according to the filings. Wei also converted the preferred shares he owned under the old company structure to 2,315,431 shares of common stock. Another filing shows that Edward Glassmeyer, general partner at Oak Investment Partners, converted more than 2 million preferred shares to common stock and purchased 10,000 new G-1 shares, each representing 5,867.3 common shares.
Some think it's amazing the company's survived so tenaciously. "[CEO] Dave Schaeffer basically had Cisco by the balls with huge vendor financing," says one industry analyst, who asked not to be named. "This is a real 'build it and they will come' network."
But the same analyst says Cogent's proposition of "100 Mbit/s for $1,000 a month!" is compelling. Trouble is, to get the big corporate customers it needs, Cogent must put big bucks into network expansion. So far, it's done so through a mix of build-outs and acquisitions (see Cogent Munches Midwestern ISP, Cogent Acquires PSINet, and Cogent Buying Binge: Another Bubble? ).
Given these challenges, and growing competition in the Ethernet space from the incumbent Bells and IXCs, the analyst says he admires Schaeffer's ability to convince his backers the deal will ultimately be worth it, "even though he has to screw them now."
Cogent's early-2003 figures hint at improving prospects (see below). In fact, it looks as if revenues have grown from about $3.5 million for the first quarter of 2002 to $14.2 million for the quarter ended March 31, 2003. More will be revealed when the firm releases its next quarterly financials -- set to happen on or before August 15.
— Mary Jander, Senior Editor, Light Reading