Some big fiber-optic companies have been counting on a boost from new data-intensive functions, especially streaming video. Global Crossing's Casey, for example, argues that as companies reduce their travel budgets, online video-conferencing will grow.
But high-speed consumer connections remain rare, and Kalla's survey found that companies don't expect to use more streaming video for three years. That will be too late for at least some of today's fiber-optic firms and their restless investors, analysts said.
For the Record
Los Angeles Times Saturday April 7, 2001 Home Edition Business Part C Page 2 Financial Desk 2 inches; 60 words Type of Material: Correction
Fiber-optic revenue--A story in Thursday's Business section on the problems of fiber-optic communications companies misstated Global Crossing's revenue. The company reported $3.8 billion in revenue last year, of which $1.4 billion came from business customers that aren't communications carriers themselves. In addition, the company had year-end liabilities totaling $14 billion, including $7.3 billion in debt.
"We are extremely cautious on the long-haul industry," said Aryeh Bourkoff, senior analyst at UBS Warburg in Stamford, Conn. "This year there shouldn't be many defaults, but there will be some actual bankruptcy filings in 2002 if the capital markets do not improve."
And struggling companies might not be rescued through acquisitions, because no one is in a buying mood. The traditional big carriers would just as soon see the upstarts fail, the newcomers are already too debt-laden, and the regional Baby Bells, like Verizon Communications Inc. and Pacific Bell parent SBC Communications Inc., appear reluctant to divert the cash coming in from their local-call operations.
But one way or another, the bloated number of fiber-optic cable miles will wind up being run by fewer companies, Kalla said. "There's obviously going to be enormous restructuring, and it's likely that the prices are going to be fire-sale prices."