Business News – News Briefs
Posted: 09/2000
News Briefs
FirstWorld Faces Federal Class Action Suit
A class action lawsuit filed July 18 in the U.S. District Court in Denver accuses FirstWorld Communications Inc.
(www.firstworld.com) and some of its officers and directors of selling 10 million shares of common stock under false pretenses.
A July 5 financial report and outlook the company released announced a change in FirstWorld’s business plan to “strategically focus its capital and resources toward its IDC [Internet data centers] business.” The company says its IDC business “offers the greatest and most immediate return on investment.”
However, the lawsuit filed on behalf of FirstWorld stockholders claims the company in its prospectus and registration statement misrepresented its operations and its ability to continue to execute its business plan.
According to Milberg Weiss Bershad Hynes & Lerach LLP
(www.milberg.com), a law firm representing plaintiffs in the suit, at the time of FirstWorld’s IPO in March, the company was planning on dramatically changing its business model. The company suffered from deficient bandwidth capacity, commercially unsuitable connectivity, poorly trained sales staff and inadequate security.
In its July financial report, the company anticipated second-quarter revenue to fall within the range of $17.9 million to $18.2 million, below published analyst expectations of approximately $19.9 million. Among the factors affecting those revenues, FirstWorld reported, was the “increased operational expenses related to enhancements in its IDC product line, such as additional bandwidth capacity based on customer requirements and heightened security through the installation of state-of-the-art remote monitoring equipment.”
Utility.com Acquires VCOM.COM
Privately held Utility.com
(www.utility.com), an Internet utility company based in Albany, Calif., has agreed to acquire VCOM.COM
(www.vcom.com), a New York-based online long-distance reseller to websites.
Chris King, Utility.com’s founder and CEO, says the acquisition is a major step in providing customers with bundled services comprising energy and telecommunications.
Utility.com currently is licensed to provide electrical service in nine states (Arizona, California, Massachusetts, Nevada, New Jersey, New York, Pennsylvania and Rhode Island), and it is seeking licenses to provide service to 23 other states and the District of Columbia by the end of 2001.
The acquisition gives Utility.com immediate entry into telecommunications and provides the company with an in-place customer base and a trained workforce, King says. The acquisition saves the company six months in its move toward its strategic goals and profitability.
Compass Telecommunications Acquires Intelogistics
Compass Telecommunications
(www.compasstel.com), a facilities-based CLEC and ICP headquartered in Scottsdale, Ariz., has acquired Intelogistics Corp.
(www.intelogistics.net), a Fort Lauderdale, Fla.-based telephone and Internet direct marketing and sales provider.
“Intelogistics adds a very important element to our ongoing business model both in terms of the variety of established mass market and other products they bring to our ICP concept, but also with their highly developed R&D [research and development] capability,” Ray Powers, Compass president and CEO, said in a news release.
Earlier this year, wholesale carrier Williams Communications
(www.williamscommunications.com) acquired $5 million in Compass preferred stock as part of a $120 million, 20-year deal to provide voice, data and capacity services to the
CLEC.
American TeleSource Buys Genesis Communications
American TeleSource International Inc.
(www.atsi.net) is acquiring San Diego-based carrier Genesis Communications International Inc.
(www.genesisld.com) in exchange for approximately $37.3 million in ATSI stock. The transaction’s close will be contingent upon regulatory approval and other
customary conditions.
ATSI, a facilities-based carrier with headquarters in San Antonio, Texas, has also announced that, upon closing of the acquisition, Derek M. Gietzen, Genesis CEO and president, will be named president and COO of ATSI. Genesis co-founder and CFO Thalia R. Gietzen will become executive vice president of finance and administration for ATSI’s U.S. operations.
Heritage Communications Completes Havenet Purchase
Privately held Heritage Communications Corp.
(www.hcc.net), a Florida-based carrier, has completed its acquisition of Havenet Internet Services Inc., an ISP and website developer. The deal’s value was not disclosed.
HCC president and CEO Bill Tolley calls the acquisition “a comprehensive step toward the diversification of HCC’s service offerings and network expansion to include the full range of telecommunications services.”
Havenet president Ray Jackman, who has been made HCC’s director of IP services, says being bought by Heritage “will allow us to expand our services and enter into the next generation of products, merging voice and the Internet.”
Teleflex Gets Genius Billing Idea
Teleflex Technologies, Inc., parent company of Tele-Flex Systems, Inc.
(www.tele-flex.com) a world-class designer of telecommunications and utility billing and voice processing systems has launched a new venture, WEB-Billing, Inc.
The venture offers Tele-Flex’s convergent billing platform Genius 5.0 in an ASP environment to the telecommunication and utility industries.
The Internet/E-Commerce enabled solution includes electronic bill presentation and payment (EBPP), Web-based order processing and reporting, and customer service access.
“The competitive telecommunication and utility industries are developing further and product offerings are changing rapidly. Time to market, initial investment and the ability to focus on product development and marketing are crucial to a company’s success,” says Martin Senn, Teleflex System’s vice president of sales and marketing.
He adds, “We also have aligned ourselves with OSG Billing Services, Inc.
[www.osgbilling.com] of New Jersey to provide our customers with the best printing and mailing solution available today. OSG has been a great partner for many years and compliments our billing product perfectly.”
