- The Washington Times - Monday, September 3, 2001

Savvis Communications Inc. felt the rug being pulled out from under it when Bridge Information Systems, the company's number one client, filed for bankruptcy in February.
The company also reduced its work force of 589 persons by 12 percent back in February. Chief Financial Officer David Frear called the layoffs a reaction to the general economic slowdown in the country, and a reaction to the uncertainty associated with Bridge's trouble.
The stock of the Herndon company, which provides commercial global data networking and Internet services has been trading at under a dollar since June 8. Its 52-week high of $11.19 came almost a year ago on Sept. 19. The stock closed at 96 cents on Friday.
Now the company hopes that a 5-year deal it struck with MoneyLine Network for $122 million last Monday, and another deal struck earlier with Reuters will pull its stock out of the cellar. The company will provide MoneyLine with networking services.
MoneyLine is a New York provider of computer-based financial information which runs on a subscription plan. The deal with MoneyLine is expected to close this month.
Reuters acquired most of Bridge's assets in May, and signed on to a $366 million deal that the Department of Justice approved last Wednesday.
Daniel Renouard, an analyst with Robert W. Baird & Co. in Milwaukee, says the deal with MoneyLine could not have come at a better time, because Savvis has run out of cash and there's a risk of bankruptcy.
"It gives them another solid customer, relative to how Bridge was," he says. "It will get a revenue stream going. Any revenue stream is positive. It helps them move to profitability."
Mr. Renouard rates the company at "market perform," saying more work needs to be done at Savvis before his company would feel confident in upgrading Savvis' stock to "buy."
"We're waiting to see if they get a larger funding deal from another company. It's needed now. They need the cash," he says.
Savvis Chief Financial Officer David Frear isn't saying whether that will happen.
"These are interesting times, to the extent that we established a funding plan. It would make sense to do that," he says. "It's always a possibility."
One of the reasons telecom stocks have fallen flat, Mr. Renouard says, is that there are too many companies vying for the same market.
"There's too much capital, too many suppliers. The pie is only so big," he says. "You aren't going to make it bigger by adding more players, and that's what happened."
Mr. Frear says Savvis' stock was hit especially hard, because of their alliance with Bridge Information Systems.
"The concerns about Bridge's bankruptcy had hung over the stock since February," he says.
The stock of many telecommunications networks, including Global Crossing, AT&T; and Sprint have also plummeted, Mr. Renouard says.
"They're all pretty ugly," he says. "The entire sector suffered a big meltdown, and there's no sign of it abating."
Most telecommunications companies have experienced the same woes as Savvis.
"It's a pretty challenging time for all companies. I can't find a telecom stock where they are doing better than they thought they'd be doing six, nine, or 12 months ago," he says.


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