Covad Adjusts Q3 Financial Results For the Worse
The news regarding Covad Communication's (www.covad.com), third quarter results took a turn for the worse today, as the company announced that five additional Internet Service Providers are delinquent in their accounts.
The addition of these five companies brings the total number of ISPs to 14, for which Covad has decided not to recognize revenue from for third quarter transactions. Revenue for all 14 delinquent ISPs will be recognized only after they have satisfied their past due balances.
Covad states that they are developing a variety of responses with respect to each of these ISPs, including management of orders, order processing and installations. The announcement that these five ISPs are now delinquent, has reduced Covad's third quarter earnings by $10.4 million; however, some of the previously delinquent ISPs have submitted payment, so the third quarter loss was only increased by $4.9 million, for a total loss of $125.3 million, instead of the $120.4 million reported in October.
Covad's financial troubles indicate a much bumpier ride then most expected in the effort to un-bundle the local loop for DSL broadband access. Covad recently changed top management and received a $150 million equity investment from SBC communications.