FirstWorld Sharpens Focus on Data Centers

CarrierHotels News Staff

August 8, 2000 -- FirstWorld Communications, Inc. said today it would seek to sell several lines of business to focus on the market for Internet data centers, which showed strong revenue growth in the most recent quarter.
"I am very confident in the IDC (Internet Data Center) opportunity,'' said Donald L. Sturm, FirstWorld's chairman, president and CEO. "The fundamental logic of small and medium-sized businesses choosing to conserve their limited capital and technical labor force by outsourcing their data functions, continues to be a clear trend and compelling need.
"FirstWorld is positioned to become a significant player in this space and is developing more advanced managed service offerings to serve our customer's demand,'' Sturm concluded.
To pursue that opportunity, the company will likely shed other lines of business, Sturm said.
"After considering the various market dynamics in each of our non-IDC lines of business, FirstWorld has decided to maximize the value of each of these businesses by exploring each of their dispositions and has engaged Daniels & Associates to assist FirstWorld in realizing this business strategy," Sturm said.
"We are confident that the value of these Web integration, Internet services and telephony assets will be maximized if owned and operated by entities which possess larger scale operations and where meaningful synergies can be realized through the integration of FirstWorld's units into their existing operations," he explained.
"We have already received several unsolicited inquiries about these assets and believe that the sale of these businesses will not only maximize our return on capital, but will contribute additional capital funding to our IDC business while allowing the Company to focus on realizing recurring revenue from our higher margin and higher growth IDC business.''
FirstWorld said it had accepted the resignation of the Company's Chief Technology Officer, Marion Jenkins and begun a national search for a CTO to compliment the company's IDC strategy.
The company released financial results showing Internet Data Center (IDC) revenue for second quarter 2000 was $1.9 million, a 60 percent increase over first quarter 2000 revenue of $1.2 million. Overall revenues for the quarter were $18.1 million, up 48 percent or $5.9 million from second quarter 1999 revenue of $12.2 million.
FirstWorld's EBITDA loss for second quarter 2000 was $25.6 million, an increase of approximately $7 million compared to first quarter 2000 EBITDA loss of $18.8 million. The increase in EBITDA loss was primarily due to FirstWorld's expansion and IDC deployment.
FirstWorld also announced it had launched an incentive plan to retain FirstWorld's valuable employee base that will include the issuance of approximately 2.5 million stock options to the company's employees at fair market value.