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Global Crossing Lost $10 Billion in 2001

Light Reading
News Analysis
Light Reading
2/27/2002
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Bankrupt telecom giant Global Crossing Ltd. (NYSE: GX) will report a net loss of at least $10.9 billion for 2001, according to earnings estimates released by the company yesterday. Revenues for the year are expected to be about $3.2 billion (see GlobalX Shares Its Pain).

As part of the net loss, the company says it expects about an $8 billion writeoff of its remaining goodwill and other intangible assets; a multibillion-dollar writedown of its tangible assets; a $2.1 billion writedown of the company’s equity investment portfolio, including its investment in Exodus Communications Inc. (see Global Xing Comments on Exodus); $545 million related to the impairment of goodwill associated with its Global Marine unit; plus $294 million in restructuring charges. The losses are applicable to common shareholders.

The company filed for chapter 11 on January 28 (see Global Crossing Falls Overboard) and was supposed to have announced both its fourth quarter and full year 2001 earnings yesterday. However, due to the fact that its auditor, Arthur Andersen LLP, is still reviewing its financial statements, the company only released unaudited revenue estimates. It said it would release its complete financial results when it files its annual report with the Securities and Exchange Commission (SEC). A date for the filing has not yet been set, according to Tisha Kresler, a spokeswoman for the company.

The company expects to report about $804 million in revenues for its fourth quarter of 2001, most of which is accounted for by $764 million in service revenue. Of the approximately $3.2 billion the company expects to report in full-year revenue, about $3.1 billion is service revenue.

Global Crossing had $2.2 billion in cash and cash equivalents at the end of the third quarter of 2001, but held only about $700 million in accessible cash as of February 25, according to the announcement yesterday. In addition, the company has nearly $820 million in restricted bank accounts and Asia Global Crossing Ltd. (NYSE: AX) bank accounts. The amount of cash the company has is important to creditors, since it determines how much money will be available for the reorganization. Global Crossing would not reveal what its cash burn has been since the company filed for bankruptcy a month ago, but the Los Angeles Times reported today that the company had spent about $200 million since the filing.

"We feel comfortable with our cash position throughout the restructuring process," Kresler says.

Global Crossing is currently being investigated by both the SEC and the FBI for alleged accounting irregularities, such as reporting IRU swaps as revenue (see Qwest Called on Global Crossing , Global Crossing: More Questions, and 360networks Subpoenaed).

Asia Global Crossing, a subsidiary of Global Crossing, also reported preliminary revenues yesterday. The company is not part of the bankruptcy filing but warned that it would report a “material” loss due to several charges and that its auditors were questioning whether or not it could stay in business: "It is likely that in their report on the company’s audited financial statements, the company’s auditors will express substantial doubt about the company’s ability to continue as a going concern."

Asia Global Crossing also announced that its revenues for 2001, excluding IRUs, had risen 328 percent to $121.5 million.

Shares in Asia Global Crossing, 59 percent of which belong to the parent company, were halted for an imbalance today. The shares are expected to open between 15 cents and 25 cents, well below their closing at 36 cents on the New York Stock Exchange yesterday. The company’s stock has lost about 94 percent of its value over the past year.

In addition to the preliminary financial information, Global Crossing announced yesterday that it had appointed Carl Grivner as chief operating officer and Anthony Christie as senior vice president of product management. The company also reported that Mark Attanasio had resigned as a member of the board and that it is recruiting new board members (see GlobalX Names COO).

— Eugénie Larson, Reporter, Light Reading
http://www.lightreading.com

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PantomineHorse
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PantomineHorse,
User Rank: Light Beer
12/4/2012 | 10:52:02 PM
re: Global Crossing Lost $10 Billion in 2001
"Global Crossing in running for gov't contract"

biz.yahoo.com/rf/020228/n28208...

"NEW YORK, Feb 28 (Reuters) - The Pentagon relaxed the security requirements for a planned network in a way that let Global Crossing Ltd. remain in the bidding for the lucrative contract, the New York Times reported on Thursday..."

"...When Pentagon officials reopened the competition, they dropped the demand that workers who manage the network have clearances to deal with secret information, in effect removing an obstacle for Global Crossing, the only competitor that did not meet the initial standards, the Times said..."

"Since Hutchison Whampoa Ltd. of Hong Kong and a unit of Singapore Technologies proposed to buy Global Crossing, it appeared that it would be difficult for the government to award the contract, which involves the transmission of military data, to a company that may come under the control of foreign concerns, the Times said on Feb. 14.

It now appears that Global Crossing's political contributions and high-level connections may have had bearing on the lifting of the security clearence provision, the Times said."

It's a spoof. Right?

I say that because isn't "clearence" spelled "clearance".
lacrone
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lacrone,
User Rank: Light Beer
12/4/2012 | 10:51:57 PM
re: Global Crossing Lost $10 Billion in 2001

When are they going to investigate George Gilder? He shilled for Global Crossings. My question is: did Gilder make any money from Global stock? If he did, then he had a vested interest in promoting the shares If he had stock and didn't make any money then he was as big a fool as the rest of us who owned shares. Another question. Did he or anyone from Forbes make any money from Global Crossing through any means?
PantomineHorse
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PantomineHorse,
User Rank: Light Beer
12/4/2012 | 10:51:55 PM
re: Global Crossing Lost $10 Billion in 2001
"Did [Gilder] or anyone from Forbes make any money from Global Crossing through any means?"

I don't know about Gilder or Forbers, but many well-connected people made money off of GX, including elder Bush.

Here, you can read this sample article. I'm not sure it references elder Bush but there is plenty of material around the web on what is yet another scam.

http://www.nytimes.com/2002/02...
Deadbeat
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Deadbeat,
User Rank: Light Beer
12/4/2012 | 10:51:54 PM
re: Global Crossing Lost $10 Billion in 2001
Bush the 1st and his cronies have brought the gov't/business 'revolving door' to new heights with their insidious "Carlyle Group.'

Composed of ex cabinet ministers, George himself, and ex-honchos from the world's biggest trough-the Pentagon, they're reaping huge profits leveraging their influence with back room deals at the country club that would make an old madame from the mustang ranch blush...

So here's the neoliberal formula:
1) Proclaim Free market capitalism king...
2) Associate #1 with "Democracy" and therefore anything that threatens the ability of large corporations to make a buck 'threatens Democracy..'
3) Use money to buy access, populate the 'Regulating Bodies' with industry insiders,
neuter the SEC, FCC, FERQ, etc) put an administration in power with the collective social IQ of a carrot, zero conscience and favors to pay back and...
4) Speak to the public like little children with terms we can understand like 'Good vs. Evil.'
5) Cook the books, sell high and essentially suck wealth from trusting investors...
5) Plead ignorance if/when called to the carpet...

The above allows the top .1% to own a greater and greater percentage of all wealth...not a bad formule if you're the one out of a thousand like a CEO or idiot board member...

Bottom line: the US is a nation of idiots if Pres. 'Select' Bush has an 80% approval rating...

BTW: George the elder did in fact forgo his usual $80K speaking fee way back when in exchange for GX stock...it was at one time worth approx. $15M (don't know when he got out...)
lacrone
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lacrone,
User Rank: Light Beer
12/4/2012 | 10:51:47 PM
re: Global Crossing Lost $10 Billion in 2001
George Bush and son did not sucker in the average investor or me into buying Global Crossings. George Gilder and Forbes did it with their slick promotions and their credibility. I believed Gilder's line that the market for Global Crossings was positioned to take off like Microsoft. I did't know ,as Gilder did, that Global Crossings was the product of a slick wall street bond trader. Had I known, I would never have put my money at risk. I paid Gilder for solid information--I got suckered.
PantomineHorse
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PantomineHorse,
User Rank: Light Beer
12/4/2012 | 10:51:46 PM
re: Global Crossing Lost $10 Billion in 2001
"George Gilder and Forbes did it with their slick promotions and their credibility. I believed Gilder's line that the market for Global Crossings was positioned to take off like Microsoft..."

Most American "investors" don't belong in the market. As <deadbeat> suggests, there is an elite (0.1%) whose long-term gameplan is to separate sheeple from their money, a sort of "hidden tax".

That's not to say you can't make money, but it requires a different line of reasoning that what's promoted (via the likes of Gilder, CNBC, economists, Greenspan, etc.) AND a certain amount of diligence.

If you understand how the game is rigged (by the 0.1%) and various rules, then you stand a fairly good chance of coming out ahead.</deadbeat>
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