DSL.net reports fourth-quarter loss

(Telephony) DSL.net has joined its high-speed Internet access brethren in reporting a fourth quarter loss that was primarily accountable to higher operating expenses.

The New Haven, Conn.-based company--a direct provider of high-speed Internet access for small and medium-sized businesses--posted a net loss of $29.9 million, or 47 cents per share, compared with a loss of $9.9 million, or 21 cents per share, a year ago. Fourth-quarter operating expenses were $38.5 million compared to $11.7 million during the previous fourth quarter.

The company further predicted EBITDA losses between $18 million to $19 million in the first quarter and between $55 million and $60 million for 2001.

Fourth-quarter revenues were up to $7.1 million from last year's $810,881, the company said. First-quarter revenues are projected to be $8.2 million to $8.7 million and annual revenues are expected to be between $45 million and $50 million.

Much like its DSL brethren, the company saw reason for hope. DSL.net's hope hangs on its business model.

"We have our own facilities, and we are a direct provider to the end user," said Dave Struwas, chairman/CEO.

This means, DSL.net can avoid dealing with financially troubled ISPs by selling direct to end users, thus, "our receivables are tied to a generally small individual customer account, not to large ISP customers," Struwas said.

Struwas conceded that today's DSL space is not pretty.

"DSL technology makes sense for a lot of businesses, particularly the small or medium-sized businesses that we target. It made sense a year ago when excitement in the financial community was high, and it makes sense today when the excitement has dissipated," he said.

It also costs dollars, Struwas conceded.

"We're pursuing opportunities for additional capital, with a goal to fund fully the company through EBITDA break-even and cash-flow positive, which we currently estimate would require $65 million and $75 million respectively," he said.

DSL.net expects to have enough cash resources to carry it into the fourth quarter, by which time Struwas believes it will be on a profit-seeking track.

"We look out over the sometimes rough terrain of the DSL landscape, and we see ourselves winning," he insisted.