Global Crossing Cuts Assets

Executives at Global Crossing Inc., announced Friday a sweeping range of cutbacks to shore up company finances amidst mounting losses and increasing debt.

by Jim Wagner of internetnews.com [March 11, 2002]

The drawdown is expected to save Global Crossing hundreds of millions of dollars. Capital expenditures will be slashed from $3.2 billion down to $200 million in its non-Asian operations (Global Crossing is a majority shareholder of Asia Global Crossing, which is also experiencing financial difficulties).

The company is cutting 1,600 jobs by the end of the month, in addition to the 800 voluntary employee cuts already announced, and is selling off 71 offices that executives consider are outside their core business strategy.

Executives also agreed to take a pay cut to shore in costs, and a variety of programs will be discontinued as the company looks for a way to escape its Chapter 11 bankruptcy.

It's the latest round for an ever-devolving company that was once one of the most powerful fiber optic "carrier's carrier" corporations on the planet, with operations in the U.S., Asia, and Europe.

The company is currently under investigation by the Securities and Exchange Commission over concerns that finance officials and its auditor, Arthur Andersen (of Enron fame) were cooking the books to mislead investors.

John Legere, Global Crossing chief executive officer, who gave himself an immediate 30 percent pay cut, said the initiatives are the third phase in the carrier's plan to get out of bankruptcy, and were long expected.

"At the end of the restructuring process, we will emerge a lean, tightly integrated organization with world-class productivity and an ability to quickly scale up as demand increases," he said.

Global Crossing has spent the past six months dumping non-essential businesses from its portfolio, further reducing expenses and bringing cash into the coffers. The latest, the sale of its trading system to Goldman, Sachs & Co., netted the carrier $360 million.

Some experts think Global Crossing is getting ready for a sale, with rumors abounding of a bid by Gores Technology, a buyout and turnaround specialty company. Hutchinson Whampoa has already placed a bid of its own with the bankruptcy court.

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