RESTON, Va.--(BUSINESS WIRE)--Nov. 6, 2003--XO Communications, Inc. ("XO") today announced revenue and financial performance results for the three and nine month periods ending September 30, 2003. Total revenue for the third quarter of 2003 decreased by 7.3% compared to the third quarter of 2002 from $301.5 million to $279.4 million. For the first nine months of 2003, total revenue decreased by 11.6% compared to the same period of 2002, from $960.4 million to $849.4 million.
Cost of service for the third quarter of 2003 improved to 38.3% of revenue versus 41.9% of revenue for the third quarter of 2002. Selling, operating and general expenses were $179.8 million in the third quarter of 2003 or 64.3% of sales versus $175.0 million or 58.0% of sales in the third quarter of 2002.
"The market for new telecom services remains weak and we face competitive pricing pressure. In addition, during the third quarter, XO invested in its business operations and expanded its direct sales force as well as its sales agent program in key markets. These initiatives are expected to have a negative impact on our short term financial results, however, we remain hopeful about the long term benefits of the actions we have undertaken", said Carl Grivner, Chief Executive Officer.
XO anticipates that the revenue and expense trends that occurred in the third quarter of 2003 will continue in the fourth quarter of 2003. Fourth quarter revenue is expected to decline by approximately 5% versus third quarter of 2003, and loss from operations is expected to increase by approximately $14 million, from a loss of $35.9 million to a loss of approximately $50.0 million for the fourth quarter of 2003.
XO's Rights Offering covering up to 43,333,333 shares of common stock for $5.00 per share is underway and is expected to close within sixty days from today.
About XO Communications
XO Communications is a leading broadband telecommunications services provider offering a complete portfolio of telecommunications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services.
XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband telecommunications services in more than 60 markets throughout the United States.
The statements contained in this release that are not historical facts are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements include those describing XO's expected future operations and results of operations, XO's ability to increase sales results from an expanded sales force, XO's ability to continue to implement effective cost containment measures, XO's ability to provision and install promptly services ordered by new and existing customers, XO's ability to retain existing customers, and XO's estimate of the length of time that its cash and marketable securities will fund its operations. Management cautions the reader that these forward-looking statements are only predictions and are subject to risks and uncertainties and actual results may differ materially from those indicated in the forward-looking statements as a result of a number of factors. These factors include, but are not limited to, those risks and uncertainties described from time to time in the reports filed by XO Communications, Inc. with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2002 and its quarterly reports on Form 10-Q for the quarter ended March 31, 2003 and June 30, 2003.
XO, XO Not Just Talk and the XO design logo are trademarks of XO Communications, Inc.
