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Touch America announces losses, layoffs
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Touch America announced a third-quarter loss of $18.5 million Thursday and Chairman and CEO Bob Gannon said the company plans to lay off 75 employees and cut top executives’ pay because of ailing finances.
Associated Press Billings Gazette
The company operates a fiber-optic cable system and provides broadband and Internet services.
The employees to be laid off "have not been specifically identified," Gannon said in a conference call with investors. "We expect to have it more finalized by the end of this month."
Touch America spokesman Cort Freeman said the layoffs will occur in "all areas of the company," which has employees in 15 states and the District of Columbia. The Butte-based telecom, formerly Montana Power Co., has 710 employees companywide. Its largest concentration of workers, about 200, is in Butte.
Gannon said salaries of the company’s officers are being reduced, but he did not specify how much of a reduction the top executives would see. Freeman declined to comment further on the pay cuts.
Earlier this year, Touch America negotiated new three-year contracts for its four top executives and, in a move widely criticized by investors, gave them a total of $5.4 million in supplementary payments.
A group of shareholders is suing Gannon and other senior executives, hoping to force them to return the $5.4 million. Other shareholder lawsuits charge Touch America managers with misrepresenting the company’s financial position to investors.
"We are focused on becoming cash-flow positive and on tightening every aspect of our operation," Gannon said Thursday. "Because we are not currently generating cash from operations, the principal risk the company now faces is loss of liquidity."
In other words, Touch America is running out of money, said James Bellessa, an analyst for D.A. Davidson Co. in Great Falls.
"It’s still not visible when the company will turn to profitable cash-flow, let alone profitablity," Bellessa said in a telephone interview. "If they run out of money they won’t survive because they don’t have any backup financing."
The company Thursday announced a net loss of 21 cents per share or $18.5 million for the third quarter that ended September 30, compared to a net loss of $37.3 million or 32 cents per share for the second quarter that ended June 30.
Revenues increased approximately $3 million, or 4 percent, from $73.6 million in the second quarter 2002 to approximately $76.6 million in the third quarter of 2002.
The company’s stock has been creeping upward recently and closed Thursday at 55 cents a share. On Oct. 31, the stock closed at a low of 44 cents.
Touch America became a standalone company last February after the sale of its remaining Montana Power assets – the transmission and distribution system – to South Dakota-based NorthWestern Energy.
Montana Power’s stock reached a high of $65.75 in March 2000. When MPC began trading as Touch America on Feb. 15 the price was $3.83.
The New York Stock Exchange has notified Touch America that it no longer complies with the minimum standards to be listed on the Big Board. The NYSE requires companies to keep their stock value above $1, and Touch America dropped below that minimum on July 31, meaning the company could be delisted.
Copyright 2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Copyright © The Billings Gazette, a division of Lee Enterprises.
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