IDT Corp. Reports Initial Success for Winstar Restructuring Plan |
Company Reports Cost Reductions, Market Consolidations, and Sales Force Reorganization Have Winstar On Track for Profitability by End of Year
NEWARK, N.J. – May 6, 2002 – IDT Corporation (NYSE: IDT.B, IDT), a leading multinational carrier and telephone company, today reported that its recently announced strategic restructuring plan for its Winstar Communications subsidiary has begun to show positive results.
“The first phase of our restructuring plan was about cutting costs, and it’s working,” said Howard Jonas, IDT’s Chairman. “Winstar’s burn rate is down from about $16 million to under $10 million. By the end of June we expect the burn to be under $6 million. That’s a drop of nearly 65 percent. And that’s just part of the story. Our move into profitability will be powered by acquiring new customers and expanding relationships with existing customers.”
“We’re moving Winstar beyond wiring buildings to concentrating on service to our existing customers and on signing up more customers throughout our network,” said Brian Finkelstein, Winstar’s Chief Executive Officer. “We’ve restructured and strategically grown our Account Management team to deliver the best service to our customers. We are proving to our customers that Winstar’s products and service are an incredible value that will make a significant difference to their bottom line.”
Winstar provides local, long distance and Internet services to business customers with superior service at highly competitive prices. By delivering the last-mile connection without using local phone companies’ lines, it provides redundancy for businesses looking for dependable back-up service.
“Especially after September 11, anyone responsible for a company’s communications needs to be sure their systems will keep on working no matter what,” said Jim Courter, IDT’s CEO and Vice Chairman. “By offering reliable, wireless service at a good value, Winstar is the solution to over-reliance on the local phone companies. Thanks to our ongoing restructuring, we expect to be delivering a broad range of profitable services by the end of the year.”
The restructuring measures IDT announced for Winstar in March include exiting the wireline resale business; leaving its fixed wireless business in certain smaller, unprofitable markets; and consolidating various facilities and functions with IDT. Winstar is also adding approximately 600 new buildings to its fixed wireless network in the 22 cities in which it operates, increasing its total network to about 4,000 buildings from roughly 3,500.
“Winstar isn’t just here to stay, it’s set to take off,” said Howard Jonas. “With costs firmly under control, a reinvigorated sales and marketing force, and new products leveraging IDT’s international scale, we’re ready to see Winstar become a major contributor to our bottom line in the near future.”
IDT acquired substantially all the operating assets of Winstar Communications, Inc. pursuant to a sale order by the US Bankruptcy Court in Winstar’s ongoing bankruptcy proceedings in December of 2001. The newly acquired assets were transferred to Winstar Holdings, LLC, of which IDT Corporation owned 95%. On April 17, 2002, IDT announced that it has repurchased the 5% block of units of Winstar Holdings, LLC it did not already own from WCI Capital Corp. IDT Corporation now owns 100% of the interests in Winstar Holdings, LLC, which operates the Winstar business through its various subsidiaries.
IDT CORPORATION
IDT, through its IDT Telecom subsidiary, is a leading facilities-based, multinational carrier that provides a broad range of telecommunications services to its retail and wholesale customers worldwide. Through its own national telecommunications backbone and fiber optic network infrastructure, IDT Telecom provides its customers with integrated and competitively priced international and domestic long distance telephony and prepaid calling cards. IDT Media is the IDT subsidiary principally responsible for the Company’s initiatives in media, new video technologies and print media.
Through its various subsidiaries, IDT has interests in several telecom, Internet-related and media companies. IDT recently acquired Winstar Communications. IDT Corporation common shares trade on the New York Stock Exchange under the ticker symbols IDT.B and IDT. As of March 15,2002, there were 47,010,887 shares of Class B common stock (IDT.B) outstanding, and 19,088,116 shares of common stock (IDT).
Except for historical information, all of the expectations and Assumptions contained in the foregoing are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934, involving risks and uncertainties. These statements refer to our plans to implement our growth strategy, improve our financial performance, expand our infrastructure, develop new products and services, expand our customer base and enter international markets. The forward-looking statements also include our expectations concerning factors affecting the markets for our products, including the demand for long distance telecommunications, and Internet access services. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results that we anticipate. These risks and uncertainties include, but are not limited to, those risks discussed in this release. In addition to the factors specifically noted in the forward looking statements, other important factors that could result in those differences include (a) general economic conditions in the telecommunications and Internet markets, including inflation, recession, interest rates, and other economic factors; (b) casualty to or other disruption of our facilities and operations; (c) those discussed in our Annual Report on Form 10K for the period ended July 31, 2001 and (d) other factors that generally affect the business of telecommunications, Internet and other communications companies. We assume no obligation to update these forward-looking statements or to update the reasons actual results could differ materially from the results anticipated in the forward-looking statements.
|
May 06, 2002 |
Give Feedback |
|