PSINet edges nearer bankruptcy, posts $3.2 billion loss

ISP PSINet's future continues to look gloomy as the company Tuesday announced a net loss of $3.2 billion for the fourth quarter of 2000.

The Ashburn, Va., company's announcement of heavy losses comes as it considers selling a portion or all of PSINet, and company executives also are determining whether it is time to reorganize and file for federal bankruptcy protection, the company said in a statement. PSINet warns that even if it implements one of those options, the company still could run out of cash.

Already, trading of PSINet stock on The NASDAQ has been halted. The stock stopped trading on April 3 at 19 cents a share after the company told federal regulators that auditors are expected to issue "going concerns qualifications," indicating that auditors are unsure if the company can remain in business. The company also announced on April 12 that it plans to layoff an unannounced number of employees in the coming weeks to cut costs.

On Tuesday, the company reported revenue of $291.1 million for the quarter ending Dec. 31, 2000. This compares to $305.4 million in the third quarter 2000 or to $164.8 million for the fourth quarter 1999, the company said.

The company's net loss of $3.2 billion for the fourth quarter is made up of $465.1 million for disposal of discontinued business, $45.2 million in net restructuring, $2.1 billion for the impairment of certain long-lived assets and $97 million for other asset write-offs. The loss equates to a per-share loss of $16.83. One analyst polled by First Call/Thomson Financial expected a loss of $1.06 a share. The fourth quarter 2000 loss compares to a loss of $134.8 million for the same time in 1999, the company said.

Meanwhile, revenue for the full 2000 was $995.5 million, compared to $534.1 million in 1999, PSINet said. The net loss from operations was $3.8 billion for 2000, while it was $334 million for 1999.

A spokesman at PSINet could not be reached for comment regarding the financial report.

The company sits under a heavy load of debt. As of a week ago, PSINet had $520 million in cash, cash equivalents, short-term investments and marketable securities, of which about $27 million supports obligations under letters of credit, the company said. And as of Dec. 31, 2000, PSINet reported $797.3 million in various types of debt.

PSINet, as recently as last Tuesday, received notices of default on $68.1 million on equipment leases, and the company warns that, if it defaults on one of the equipment leases, it could trigger lending institutions to seek funds on other outstanding loans.

During the past year, PSINet bought approximately 75 international ISPs and also purchased consulting firm Metamor Worldwide for $1.9 billion

The IDG News Service is a Network World affiliate.