RCN Shares Slammed on Lowered Fourth-Quarter Outlook
Yi Ping Ho
(RCNC)
warned Thursday that it would post a higher-than-expected fourth-quarter loss in earnings before interest, taxes, depreciation and amortization, or EBITDA, and also said it said it expects to miss analysts' expectations for 2001 revenue.
Shares of RCN dove on the warning and were lately down $3.69, or 41.26%, to $5.25 in trading on the
The telephone, Internet and cable television service provider, based in Princeton, N.J., said it nevertheless expects to meet previous estimates for fourth-quarter revenue. It also said it the EBITDA losses, expected to be $110 million to $115 million, will decrease quarter-to-quarter next year as a result of its cost reduction initiatives and significantly reduced development activities. According to
First Call/Thomson Financial
, two analysts produced a consensus estimate of $114.09 million in fourth-quarter revenue, compared with $72.10 million in the year-ago period.
For 2001, the company said it expects revenue to be in the range of $520 million to $530 million, and EBITDA losses to be about $335 million. Three analysts called for full-year 2001 revenue of $589.87 million, compared with $396.86 million in 2000. Sales in 1999 were $276 million.
RCN also said that in 2001 it will reduce capital expenditures 50% below previous targets.