PAETEC, XO and others talk about the Billion club. Big Deal. $1 Billion in sales. In the case of XO, it cost over $8B and a BK or 2 to get there and they still have a flawed business plan. Great balance sheet for Icahn and others though.
There were other CLEC's that hit the $1B mark long before XO and PAETEC. Caruso writes about Genuity doing it in 2000. And then ICI (Intermedia) hit $1B in revenue, but $3B in debt - most of it short term. ICI had to sell to MCI in 2001. MCI kept Digex and sold the rest to Allegiance, which became XO.
A billion dollars does not mean success. Profit means success. Happy employees. Low churn - both customer and employee.
In the post, I write about how ICI had a huge, short-term debt load that it collapsed under and how Genuity hit $1B but had to sell anyway. (Carusa's post had the details of Genuity's financial problems).
It isn't about once you hit $1B, you can now compete against the RBOCs on an even field or that you have leverage at that size. Can you say Naive? Even at $1B, the ILEC's hold all the cards. Unless that $1B in revenue was in one ILEC region, THEN, yes, you would have leverage. And then the CLEC could build its own network to rely less on the ILEC. And with its own network, the CLEC would have more control over customer issues as well as the ability to be more creative in its service offerings. But do they do that? No.
You reference some big CLECs as a group, but then you knock down the financials of just one, XO. There are current rumblings from the XO board that the CEO is trying to set up the company for a personal asset transfer via bankruptcy.
What would be a good litmus for success in a market where companies are expanding exponentially? Business model and cash flow WHILE growing past the billion dollar mark?
I updated the post with my reply to your comment. Thanks for reading!
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