Still Awaiting Word on Icahn’s Offer, XO Posts Pretty Good Q4

April 4th, 2011 by · 6 Comments

As the recent controversial offer by Icahn for the remainder of XO Holdings (news, filings) that he doesn’t already own hangs in the balance, the company waited (as it always does) until the very last minute to file its Q4 anf FY2010 numbers.  The company had forecast some upbeat second half results back in October, and by and large they managed to fulfill those promises.  Revenues of $390.3M were up sequentially again, and EBITDA margins remained above 15%.  Here’s a quick table summarizing their results:

$ in millions Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10
–Broadband 199.9 209.8 209.8 220.0 228.8 237.3
–Integrated Voice 69.2 59.2 55.9 56.8 51.7 47.2
–Legacy TDM 112.9 106.8 103.8 106.8 105.2 105.8
Total Revenues 382.0 375.8 369.5 383.6 385.7 390.3
Cost of Revenue 217.7 212.7 208.5 218.9 218.3 223.7
SG&A 120.3 120.0 130.6 124.4 106.6 107.5
Adjusted EBITDA 44.1 43.3 30.6 40.5 60.8 59.2
Adj. EBITDA margin 11.5% 11.5% 8.2% 10.6% 15.8% 15.1%
Capital Expenditures 57.2 50.1 64.2 57.6 50.1 39.9

Revenue & EBITDA: Broadband revenue continued to surge powerfully, up 3.7% sequentially.  That was offset by continued expected weakness in Integrated Voice revenue, which has been declining at about a 20% annualized rate.  EBITDA margins remained above 15%, which may not be a high bar, but it is still well above the company’s historical levels of about 10%.

Cash & Capex: XO spent just $39.9M on capital expenditures, it’s lowest quarterly number in quite some time.  Not that tigher purse strings should surprise anyone.  They had intended to raise money through a rights offering over the winter, but of course it never happened, and their cash balance remains below $100M, finishing the year at about $69.6M.  They need to raise money.  But we knew that.

LMDS Spectrum:  If there was any doubt as to the potential for their LMDS spectrum, XO also wrote off another $20M in value it had ascribed to those licenses, leaving just $7.5M of it on their balance sheet.

Icahn:  I’ve actually quite surprised there has been no word yet from the Board’s special committee on the most recent offer by Icahn-controlled entities to acquire the rest of the common stock he doesn’t already own.  It’s not like there isn’t an obvious answer here.  But we did get a new datapoint from the 10-K:  Mr. First resigned from the special committee on 3/5 – no word on why although his ties to Icahn cast doubt on his independence.  And then there were two.

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Categories: CLEC · Financials

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6 Comments So Far

  • Grivner Fired says:

    Just heard this rumor….thought I would share the news. Not sure if its good or bad

  • Anon says:

    It’s true – press release is already out

  • Anonymous says:

    HERNDON, VA–(Marketwire – 04/08/11) – On April 8, 2011, Carl J. Grivner resigned as Chief Executive Officer, President, and Director of XO Holdings, Inc. (the “Company”) (OTC.BB:XOHO – News). Mr. Grivner stated, “It has been an honor and privilege for me to work at XO for eight years. My decision to leave the company to pursue other opportunities is a personal and difficult one. I wish the Company and all of its dedicated employees all the best in the future.”

    Carl C. Icahn, the Chairman of the Company’s Board of Directors and majority shareholder, stated, “We wish Carl the best in his future endeavors and thank him for his contributions to the Company. We are fortunate to have one of the deepest management teams and one of the strongest balance sheets in the telecommunications industry with approximately $1 billion in equity and no outstanding debt.”

    The Company’s Board of Directors is conducting an executive search to identify a new Chief Executive Officer and will consider both internal and external candidates. The Board of Directors has established an executive committee to oversee the Company’s operations until a permanent chief executive is selected. The executive committee will be comprised of Daniel J. Wagner, who will continue to lead XO’s Business Services unit, Ernest Ortega, who will continue to lead its Carrier Services unit, and Laura W. Thomas, the Company’s Chief Financial Officer, who will oversee all corporate functions and other business units. Mr. Grivner has agreed to assist the Company during this transition period.

  • Anonymous says:

    We got the email today about the press release.

  • Anonymous says:

    If the rats are leaving then when do Laura Thomas and Heather Gold leave?

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