Finally

Three months after its originally scheduled fourth-quarter and year-end 2000 earnings call, Covad Communications filled the financial void last week with staggering losses and uncertainty about its ability to continue operations.

In a SEC filing replete with doubtful rhetoric, the independent DSL provider says it has enough cash to last until the second quarter 2002, but “limited cash reserves and uncertainty exists concerning our ability to raise additional capital and continue as a going concern.”

Covad reported a fourth-quarter net loss of $907.5 million or $5.41 per share compared with a $70.5 million loss or 53¢ per share for the same period one year earlier.

For 2000, Covad posted a whopping $1.44 billion net loss, or $9.47 per share compared with a $195.4 million loss, or $1.83 per share in 1999.

While fourth-quarter revenues increased 40% from $30.9 million in 1999 to $55.2 million last year, Covad restated revenues for the first three quarter of 2000, lowering the results by $52.8 million to $103.5 million.

The heavy losses were not surprising. Although some financial analysts maintain the company's future is bleak, others have taken a more optimistic stance.

With competition thinning, ILEC rates increasing and demand for DSL rising, Covad's biggest challenge now is to secure the financing it needs to achieve profitability before capital runs dry, said Daniel Ernst, an independent analyst in Washington, D.C.

“Covad could be the dark horse of the CLEC story,” Ernst said. “All the right market dynamics are in place, but the stock market's going to be much more critical to what they do and how they do it from here forward.”