Focus Company: Broadwing Corporation (BWNG)
By: Bill Mathews - The CHEAP Investor - Date: September 11, 2004
NOTE: On October 8, 2004 Corvis Corporation changed its name to Broadwing Corporation with the new ticker symbol BWNG.
Introduction
Corvis Corporation, and its consolidated subsidiary Broadwing Communications, deliver innovative optical networking solutions that deliver voice, video and data solutions rapidly, flexibly and at what the company believes to be the lowest cost in the industry.
Corvis operates two divisions that serve two different elements within the communications industry.
The company's communications services division, managed within its Broadwing Communications, LLC subsidiary ("Broadwing"), is a provider of data and Internet, broadband transport and voice communications services nationwide.
Its communications equipment division designs, manufactures and sells high performance all optical and electrical/optical communications systems.
Financials
The company released its second quarter and six month sales and earnings for the period ended June 30 as shown below. Note: because of a major acquisition, these numbers far excided last year's.
| Second Quarter 2004 | Second Quarter 2003 | Six Months 2004 | Six Months 2003 | |
| Revenues (x1000) | 142,130 | 27,017 | 288,917 | 28,534 |
| Earnings (x1000) | -38,079 | -45,972 | -71,994 | -92,822 |
| Earnings/Share | -0.08 | -0.11 | -0.14 | -0.19 |
| Shares_Outstanding | 483.3 million | |||
"We made progress in our targeted Broadwing growth areas this quarter while our overall services revenue held essentially steady in the turmoil created by larger competitors struggling to maintain market share", said Dr. David Huber, Corvis' chairman and CEO.
"Our ability to minimize losses in commodity areas like domestic and international wholesale voice - and grow in targeted growth areas including data and broadband - shows the soundness of our long term strategy. We are focusing in capitalizing on these opportunities and are succeeding in selling deeper into existing customer accounts, winning new business from larger competitors as well as making progress with our new market initiatives to expand our offering", Dr. Hubert said.
In addition, Corvis said that Broadwing's new Voice over Internet Protocol (VoIP) initiative would soon move into the trial phase with a number of Fortune 500 companies around the country. The company said it is on target to begin a national rollout of its VoIP services later this year.
Conclusion
Insiders own 30% of the 485 million shares outstanding and institutions own approximately 25% of the 335 million-share float.
On the negative side, with over 485 million shares outstanding, there is a possibility that the company could decide to execute a reverse stock split.
Corvis has a good balance sheet with cash of $452 million or about $0.95 per share and a book value of almost $0.85 per share.
Even though the stock is speculative, we believe it has the potential to perform well over the next couple of years.
General information
| Market | NASDAQ |
| Symbol | BWNG |
| Price | $1.07 |
| Contact: | Broadwing Corp - 7015 Albert Einstein Drive - Columbia, MD 21046 |
| Telephone | (443) 259-4000 |
| Website | www.broadwing.com |
© Bill Mathews - The CHEAP Investor
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