As Global Crossing’s Loss Widens, Job Cuts Planned

Global Crossing Ltd. said Wednesday that its second-quarter loss ballooned to nearly $690 million and that it plans to lay off 2,000 employees and shutter 100 offices worldwide to cut costs.

The layoffs at the Bermuda-based telecommunications company, which operates a global data and voice transmission network, equal about 15% of its work force, and will hit hardest in North America.

Global Crossing said about a dozen California employees will lose their jobs. The company’s executive offices are in Beverly Hills.

As part of the cost-cutting, Global will close 100 of its 600 offices, mostly in markets with multiple offices or where two offices perform similar functions, according to Tom Casey, chief executive. He said the moves will save Global Crossing between $160 million to $170 million a year in operating expenses.

Revenue in the three months ended June 30 rose 23%, to $1.1 billion. The loss totaled 78 cents per share, including the payment of preferred stock dividends, compared to a loss of 62 cents in the same year-earlier period.

The company’s stock closed up 45 cents to close at $7 in New York Stock Exchange trading Wednesday. In after-hours trading, Global Crossing traded as high as $7.17 before settling in around $7.10.

In addition to the cutbacks, the company lowered revenue expectations for the year, to $6.4 billion to $6.9 billion, down from earlier estimates of between $7.1 billion and $7.2 billion. Global Crossing also said it will take a noncash charge of $250 million to $350 million to cover the employee severance costs and the cost of closing facilities.

However, additional charges are on the horizon, because the company is reviewing the value of some assets, including its investment in the struggling Exodus Communications.

Dan Cohrs, Global Crossing’s chief financial officer, conceded the likelihood of a write-down: “If the share price of Exodus stays where it is, it will not be good news.”

Last September, when Global Crossing sold its Web-hosting unit to Exodus in a stock deal, shares of Exodus were trading above $53. Global Crossing retained a 20% interest in Exodus. On Wednesday, Exodus shares closed up 6 cents at $1.23 on Nasdaq.

Global said analyst estimates for losses in the third quarter and for the full year are “reasonable.” Analysts polled by First Call/Thomson Financial forecast losses of 84 cents for the third quarter and losses totaling $3.17 per share for the year.

Despite the larger loss and cutbacks, Casey said the company is in better shape than others in the telecommunications industry, which have been announcing record losses and job cuts in the tens of thousands.

Global Crossing has completed its network, and its business plan is fully funded. “The market has shut down as far as capital goes . . . so no one else is going to finish,” Casey said.

The company’s pro forma results for the quarter--taking into account the purchase of IPC/IXnet and the sales of Global’s local phone lines and its GlobalCenter unit--included cash revenue of $1.6 billion, up from $1.3 billion, and operating earnings of $472 million.