Global Crossing posts loss, looks to second half of ‘06

Global Crossing posted a $109 million loss, compared to an $80 million loss in the fourth quarter of 2005, but is still on track to be adjusted EBITDA positive by June and cash flow positive by the second half of 2006, company officials said.

Significant growth in the segment of its business addressing global enterprises, collaboration and carrier data customers will enable the company to reach those goals, said CEO John Legere, despite the higher loss in the first quarter. That growth includes a record sales month in March, in which Global Crossing booked $3 million in new orders.

“This is the same kind of solid performance we have delivered over the previous five quarters,” Legere said. “We have reached an inflection point – aggregate revenue will grow in the second quarter. We are successfully completing the transformation of our business.”

That transformation focuses Global Crossing on what it calls the “invest and grow” segment of its business, including advanced services for enterprises such as managed security, IP VPNs and conferencing. That segment grew 6% sequentially in the first quarter of 2006 to an all-time high of $286 million, representing 63% of revenue and 88% of adjusted gross margin, Legere said. Advanced data services revenue grew 14% sequentially and 23% year over year, he said. Global IP traffic grew 40% while Global Crossing posed a record 65% growth in IP traffic in 2005.

Global Crossing also is benefiting from industry consolidation, he added, as enterprises have fewer options and are looking for service providers to serve as alternatives to giving all of their traffic to one mega-carrier. The consolidation has also led to more rational pricing, Legere said.

“We are seeing the continuing consolidation of our industry with the potential for disruption in account interfaces and service delivery which are causing customers to seek out alternatives,” Legere said. “We have started to run series of ads in major business and trade magazines to underscore” Global Crossing’s ability to serve as an alternative carrier.

Total revenues for the first quarter were $456.0 million compared to $526.0 million in the year ago quarter.