Genuity trims spending, sees stock rise

Genuity this week said it would cut capital spending over the next three years as the company’s business model changes to reflect the economic climate.

In its annual analyst meeting, the company revised its spending plans downward for the second time in six months, forecasting between $4 billion and $5 billion in network equipment orders through fiscal 2004. In December, Genuity trimmed its spending figures back from the $9 billion–$11 billion range to $7 billion–$9 billion.

The Internet infrastructure services provider said it would focus on strengthening its sales force in order to scale its nearly completed network. Genuity also said it would continue focusing on its e-business customers and migrating business toward higher-margin hosting and value-added services.

“We believe that effectively, we have invested in the footprint that we need both in the network as well as from a hosting point of view,” said Joe Farina, Genuity’s president and COO. “Now the challenge for us and our focus is on increasing our leverage on those assets.”

Earlier this month, Genuity reported a first quarter net loss of $299 million. Looking ahead, the company reiterated to analysts its revised guidance from 3 weeks ago, projecting revenues between $1.3 billion and $1.35 billion. EBITDA loss for the year is expected to be in the range of $675 million to $700 million.

The decreased spending news pushed Genuity’s stock price Tuesday from $2.39 to a $3.08 close. Shares opened at $3 this morning and closed at $3.28.