Anon | reply to hernang7542
Re: Nail in the Cofffin?!?
This isn't news. This is just one in a series of class action lawsuits that were filed by different law firms for the same issue. Some of you might remember that approximately 6-10 were filed within a two-week period back in November.
Covad attorneys I'm sure are already working those cases, so the cost of adding another suit will be minimal if any, and isn't going to add to current operating costs. That doesn't mean this is a good thing, it just means that it won't cost anymore money. Keep in mind that this case and all of the others won't conclude for years. If Covad has to pay, it will be well down the road, so don't expect this to be the catalyst that drives Covad out of business immediately.
They claim that at their current burn rate, cash on hand is can carry them through July 2002. If you look at their Q1 income statement, this account is true. They had enough cash at the end of March to carry them a little over 5 quarters, given their current quarterly cash expenses.
I suspect that they'll attempt to secure funding or seek purchase through the middle of May 2002. By then, their Q1 2002 earnings should have been out for a few weeks, and their next one wouldn't be until July 2002, the point at which all money will have run out. If their earnings improvements don't attract offers by the middle of May 2002, bankruptcy is imminent.
Even if they have to declare bankruptcy, the cash is still there to fund their network through July 2002. If you have Covad DSL, it will be about a year before they liquidate their network, if it happens at all, so don't think that you have to find a new provider immediately. Also, with the lessons learned from the NP debacle, I expect that end-users will be converted in a more expeditious manner, and those who can't be converted will at least be given a little more forewarning. No one expected Northpoint's sudden end, but people are closely watching Covad. |
