Corvis returns to the NW200 as fastest grower

Flagging revenue bumped Corvis from the 2002 NW200 list, but the optical gear vendor acquires its way back on – and becomes the fastest-growing company in 2003.

Last February, beleaguered optical network vendor Corvis changed its destiny. Accepting that its high-end carrier gear, although well respected, wasn’t its future, Corvis bid to acquire its largest customer, broadband services provider Broadwing. The deal closed in June and led to 1,455% revenue growth.

“Last year at this time, pessimism about telecom occupied the headlines. But at Corvis, we were making plans for the future. We had to make tough – and painful – decisions to refocus and evolve our business,” says David Huber, CEO at Corvis, No. 96 on the NW200. In its last appearance on the NW200, in 2001, Corvis’ was ranked 126, while that year Broadwing – also knocked off the 2002 list – was at 42.

While Corvis continues to support and sell its all-optical IP switches, its main focus is broadband data services. Under Corvis, Broadwing has moved from being a carriers’ carrier with a heavy voice lineup to an enterprise data services provider. with offerings such as frame relay, ATM, Internet access and VPNs. With that lineup, Corvis garnered two-thirds of 2003 revenue from the enterprise market, says Andy Backman, vice president of investor relations.

Corvis closed 2003 with $314 million in revenue, up from the $20.2 million posted in 2002. Of that $314 million, $310 million is attributable to Broadwing, just six months under Corvis’ wing, Backman says. Not bad, given Corvis only paid $80 million for Broadwing.

On the downside, profitability remained an issue in 2003. Corvis posted a $261 million net loss for the year. However, that roughly halves the $508 million loss the company registered in ’02. Corvis has implemented an aggressive access cost-reduction program for the Broadwing business, Backman says. Through strategic investments, Corvis is extending Broadwing’s nationwide all-optical IP backbone with an access infrastructure. Already, it has squeezed out between $3 million and $6 million per month in fees by building its own access network. Plus, last month the company bought Focal Communications, a nationwide competitive local exchange carrier, which gave it an access network in 23 top metropolitan markets, he says. The deal is valued at $210 million.

Backman says he wants Corvis to become profitable in 2004 and could perhaps achieve that as early as mid-year. “Last year we made our business stronger to support long-term shareholder value,” Huber says. “This year the job of everyone at our company is clear. It is to drive the company to profitability.”