SPECIAL REPORT: AFTER THE FALL
Market Selloff Batters Network Builders
Wavve seeks new investors amid 'substantial doubt'

By Rich Miller
CarrierHotels News Staff

Dec. 1, 2000 -- The dramatic drop in shares of technology stocks on Wall Street is taking its toll on broadband network builders.
One publicly-held colocation firm said yesterday it was hastening to arrange financing to remain in business. The slide may also complicate the pricing of previously announced megadeals based upon exchanges of common stock.
But analysts say the fundamentals for future growth in the broadband and Internet infrastructure sectors will remain strong. The current selloff, they say, raises the bar for companies who seek to profit from that growth in the cash-intensive facilities market.
Some industry watchers predicted the selloff may hasten consolidation in the broadband infrastructure arena, leaving a smaller, stronger industry to benefit from future growth in IP-based networks.
Yesterday colocation provider Wavve Telecommunications said growing losses left "substantial doubt" about its ability to remain in business. The company said it was seeking funding from real estate investment trusts. Wavve's shares closed at 46 cents, down 9 cents a share, and well off their high of $15 a share in March.
Meanwhile, stocks of other facilities companies experienced a wild ride along with the rest of the technology sector, getting pummelled Thursday and then regaining some of the losses Friday morning as the NASDAQ recovered:

• Terremark WorldWide, a Miami-based developer of carrier hotels, lost 30 percent of its share value Thursday, falling 55 cents to $1.25 per share, a 52-week low. It regained most of that loss in early Friday trading, and stood at $1.65 at mid-morning.
• Shares of Globix Corp, which operates five "SuperPOP" centers, took a 22.2 percent hit on the day, dropping 75 cents to $2.62, down from $60 a share in February.
• Equinix was off 50 cents on the session to $4.38, a loss of 10 percent. Shares of Equinix, which offers colocation services in six major markets, traded at $15 as recently as September.

Not all the Internet infrastructure stocks were lower Thursday. Shares of Metromedia Fiber Network rose 50 cents to $11.69 after its top two executives, chairman and CEO Stephen A. Garofalo and president Nick M. Tanzi, announced they had purchased 1 million shares of MMFN stock for $11 million.
Thursday's losers had plenty of company among marquee tech stocks, as Gateway dropped 35 percent and shares of Microsoft, Intel and Dell also had double-digit percentage losses.
The Dow Jones industrial average plunged 214.62, while the Nasdaq Composite Index dropped 108.92 (or 4.02 percent) to 2,598.01. The Nasdaq is now down by 50 percent from its high in March and has lost 25 percent of its value in the past month.
Among the most battered issues were Competitive Local Exchange Carriers (CLECs) specializing in high-speed DSL services. Shares of NorthPoint Communications Group Inc. lost 73 percent of their value Thursday after the company's merger pact with Verizon Communications crumbled and analysts questioned whether the Internet access company could survive.
It wasn't clear if the falling share prices would have any impact upon completion of two major stock-based deals announced in September.
On Sept. 5, WorldCom acquired Intermedia Communications, primarily to acquire Intermedia's web hosting unit, Digex. Then on Sept. 28 Exodus said it would pay $6.5 billion to buy Global Center, the data center business unit of Global Crossing.
Exodus stock has slid from $53.25 at the time of the deal to $22.75 at Thursday's close. Under terms of the all-stock deal, Exodus will issue common shares equal to $6.525 billion divided by the average closing price upon the closing of the deal, which is expected to take place in the first quarter of 2001, the companies said.
WorldCom's stock stood at about $35 a share when it announced the deal to buy Intermedia, and closed at just under $15 a share Thursday. The deal, which is also expected to close in the first quarter of next year, is based partly upon an exchange of common stock that includes a "collar" based on price fluctuations of either companies' shares.