BOSTON (08/08/2000) - Verizon Corp.'s US$800 million purchase of a controlling interest in broadband company NorthPoint Communications Group Inc., announced Tuesday, will merge the two companies' digital subscriber line (DSL) businesses.
Verizon paid cash for the 55 percent stake in NorthPoint. Of the total, $450 million will go toward capital expenditures for the new company, while NorthPoint shareholders will receive $350 million, or $2.50 per share, Verizon said in a statement. Regulatory and shareholder approval is pending.
The "new" NorthPoint formed by the merger will continue to operate as a separate company. NorthPoint and Verizon are expected to serve more than 600,000 DSL subscribers when combined operations begin in mid-2001, according to the company's statement.
NorthPoint stock was $15.75 in morning Nasdaq trading, up from Monday's $15 close, but still near an all-time low since the company's $40 debut in May 1999. NorthPoint posted its second quarter earnings report Tuesday as well, taking a $112 million, 85 cent per share loss in line with analyst expectations, but increasing revenue almost 10 times over the comparable period a year before, growing to $24.4 million from $2.5 million.
Verizon, on the other hand, disappointed analysts with its second-quarter report. Second-quarter profits rose to $1.97 billion -- 72 cents a share -- an increase over the $1.87 billion, 67 cent a share posting a year earlier.
Analysts polled by First Call/Thomson Financial had expected an 83 cent a share profit.
Verizon was down Tuesday morning by $5.44 to $42.44 from Monday's close of $47.88, an 11.36 percent drop.
Verizon Communications, in New York, can be contacted at +1-212-395-2121 or on the Web at http://www.verizon.com. NorthPoint, in San Francisco, California, can be contacted at +1-415-403-4003.