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Posted by
BradyNet
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Wednesday, March 10, '04
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Global Crossing, which is based in Bermuda but has corporate offices in Florham Park, N.J., built a 100,000-mile, high-speed fiber-optic network before it collapsed under $12.4 billion in debt in January 2002. The company's founder, Gary Winnick, resigned in December 2002. The company is negotiating a final settlement with the Securities and Exchange Commission on issues involving disclosure of financial information.
In some ways, Wednesday's profit number is the flip side to the huge write-offs that companies announced after the tech-and-telecom bubble burst four years ago. In 2001, Global Crossing wrote off about $17 billion in assets, while Time Warner Inc., posted a record single quarter loss of $44.9 billion in 2002 due to a $45.5 billion write-off.
In those cases, the companies were writing off assets that had been on their balance sheets. Since every balance-sheet entry must be reflected on the income statement, those write-offs showed up as losses. By filing for bankruptcy protection, Global Crossing was able to slash its balance-sheet liabilities, which flow through to the income statement as gains.
Specifically, the fourth-quarter gain came from three adjustments, which accounted for effectively all of the company's $24.88 billion profit. First, about $8 billion was due to the elimination of liabilities such as contracts with equipment vendors, which were renegotiated during bankruptcy protection. About $16 billion of the gain came from the elimination of all of the company's common and preferred shares outstanding, which again reduced liabilities.
The remainder of the gain came from "fresh start" accounting, where the value of the company's deferred revenue was reduced. This goes back to the notorious Indefeasible Rights of Use deals that Global Crossing signed with other phone companies. Those had the effect of boosting revenue, and now since the value of the contracts has been reduced, the company's liabilities under those contracts were reduced as well. That also lowered liabilities and boosted earnings.
The big profit number was completely ignored by investors, who instead focused on the company's recent performance and prospects. For the quarter, revenue fell to $719 million from $765 million, while earnings before interest, taxes, depreciation and amortization -- which weren't affected by the accounting change -- were $13 million. That compared with a loss of $62 million in the fourth quarter of 2002. Without the accounting changes, the company would have posted a net loss of about $3 million.
Jefferies's Mr. Reyes says investors dumped the stock for several reasons. First, the company's Ebitda was lower than expected, plus Global Crossing told analysts that the Ebitda number for 2004 would be a loss ranging from $100 million to $130 million.
The company also said it needed to raise about $100 million in new cash this year for operating expenses. It said it hired Citigroup Global Markets to look into the sale of its Global Marine installation and maintenance-services business. Finally, Mr. Reyes, who had an "underperform" rating on the stock, said the company has to go up against better capitalized competitors such as MCI, AT&T Corp., Sprint Corp.
Global Crossing emerged from bankruptcy protection Dec. 9, and its newly issued stock traded sporadically on the over-the-counter market until it was listed on the Nasdaq on Jan. 22. It traded just above 300,000 shares a day since then, but Wednesday, more than eight million shares changed hands.
Perhaps bankruptcy isn't so bad after all.
Global Crossing Ltd., the telecommunications company that emerged from bankruptcy court in December, reported a breathtaking quarterly profit of $24.88 billion. That is by far the highest amount of net income ever registered by a U.S. company in a quarter.
The fourth-quarter profit, which came on revenue of just $719 million, was purely the result of noncash accounting changes related to Global Crossing's emergence from Chapter 11 bankruptcy protection. The company's business continues to struggle from the brutal competition that marks the telecom industry.
"It's a gaudy number, but you have to look at where the gains are coming from," said Ashwamin Kaul, a senior market analyst at Reuters Research.
Indeed, investors didn't react as if their company was suddenly rich. They dumped Global Crossing's newly issued shares, sending them down $10.99, or 38%, to $17.82 in 4 p.m. trading on the Nasdaq Stock Market Wednesday. The company's old shares surpassed $61 in early 2000 before getting wiped out in the bankruptcy filing in 2002. "With Global Crossing you've had the opportunity to lose money twice," said Romeo A. Reyes, a telecom-stock and high-yield-bond analyst at Jefferies & Co.
Global Crossing's fourth-quarter profit is one for the history books. It dwarfs the biggest corporate profit: the $6.7 billion earned by Exxon Mobil Corp. in last year's fourth quarter, according to Thomson First Call and Reuters Research. In fact, Global Crossing earned more in the fourth quarter than Exxon Mobil, Citigroup, General Electric, Sears, Bank of America and Wal-Mart combined. Put another way, the 30 stocks in the Dow Jones Industrial Average earned just under $44 billion in the quarter.
Global Crossing's numbers also will make it perhaps the cheapest stock ever listed. The company has 40 million shares outstanding, meaning the $24.73 billion it earned for all of 2003, works out to $618.25 a share. That puts Global Crossing's price-to-earnings ratio at 0.029, nearly one-seven-hundredth the level of the broad market.
OHMYGAWD...
I like that... from time to time <monkeys> behave <rationally>.
What a beautifull bond this Veni 34 is!
20 points of instantaneous upside once the referendum is called.
A lovely 11% current yield.
Practically no downside with USTs 30 at 4.65 and oil at 36
Extremely well covered with a debt to reserves ratio of 1, vs 10 in Guano and Brazil.
Very rich against its comparables.
And looking as if it is slowly decoupling from Brazil.... the big threat against our market.
Why do you think that I want veni industry to go broke?
I don't want anything in particular in veni other than to collect my coupons on the Veni 34 and 18 (old) that I own and to continue seeing low prices so that I can continue buying more veni in the future, hopefully until July 2033.
Domestic politics in Veni, I leave it to the venezuelans. They have always been very peacefull until the CIA started working on getting its hand on Veni oil.
But still I ask you, would you support the fight for a Jewish state if Israel had lost in 1948?
we die less than them. I am happy about that.
maybe because we love to live, and have something else to do other than war.
The palestinians never started war, never ended it, will never end it, will never start peace, did never know peace, they just live on a parallel universe where they will never be requested to earn a living. they never did. they mushroomed from 150000 people to... let's say it's a couple million people (not the 20 million refugees boasted by arafat): well, they NEVER had a project about HOW the HECK 2.000.000 people would be able to live in peace. They are doomed to war.
the rest ("quit hitting back and they will stop"), is a pipe dream of "distant observers" whose only reason to be involved in ME is that it gives them a nice refuge for their resentment.
people don't know shit about the palestinians, they just LIKE to feel friends of a suicidal loser. Because that's the Gospel of our era.
1) that isnt my point (as you well know!)
2) Since the numbers are at your fingers. How many Palestinians have died at the hands of Isreali security forces compared the number of Isrealis who have died at the hands of Palestinian terrorists?
Is it really so hard to imagine why people might choose terrorism? My question to you is short of genocide, what should be done?
One last point.
I think I am a realist. I wouldnt choose to pick too many fights with people who are stronger than me. But I dont consider that a moral stance. One might argue that if I had courage, I would fight the strong, if I believed them wrong, with whatever weapons I had at my disposal. So why do people keep on refering to terrorists as cowards?
I will giove you a proportion: for every palestinian who died by isareli weapons over the past 20 years, there's 0.8 palestinians who died by hand of palestinians. including: children killed on buses, women and children killed for vengeance against "collabos" etc etc.
this is a FACT, as opposed to a <factoid> which is a lie used to embody a preconceived notion, an emotionslly appeling "tragedy" which was created in order to justify a criminal projects.
we are not discussing about different opinions: we are discussing the difference between facts and propaganda.
But there is more than one injustice in the world. More than one source of horror, and many more who die who are innocent. For every Palestinian suicide bomber who dies there usually seems to be least one 11 year old stone thrower who is shot. Are they guilty too?
I hope I havnt given the impression of being pro-terrorist. I am not. But neither do I buy everything the Western media throw at me and pretend is news coverage.
Israel was formed by "terrorists", shoting british soldiers. My uncle was one of them. Because those "terrorists" were victorious, they now have a country. But others lost that fight, and that doesnt make them evil. They are just weak.
It may well be time for them to give up, put away their weapons and give their children peace. However if I lost a brother or son, I would keep on fighting, looking for revenge, and Im not surprised that others choose that route.
When Saddam was asked to invade Iran, and given the weapons to do it, 1mn iranians died. But most in the west have now forgotten whose war that was, and why it was fought. Look at Chechnya, look at what happens to the Uigars in western China. Look at the Palestinian refugee camps. Look at the American military presence in the mid east. I may not feel this way, but it doesnt surprise me that others feel that Muslims are unfairly treated, and will fight for what they see as justice.
I ask you Ozy, what would you do if Israel had lost the fight in 1948, and Israelis lived in camps. Would you be an advocate for peace?
napoleon?
what about caesar augustus? what is his role in the current events?
and why doesn't CNN interviews him more often? What are they afraid he'd say against Bush?
and what about <Moon-watcher>? Ok, ok, he was a monkey: but he was a leader after all, no less than your beloved Neverbin Laiden
Im facinated by how keen the Spanish authorities are to pin this on ETA. Would ETA really have been so stupid? Would the Spanish govt really benefit so much from this being ETA and not AQ?
I suppose so..
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