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XO 2Q Losses Lower Than Last Year, Higher Than 1Q

XO Holdings Inc. (XOHO.OB), XO Communications’ parent company, in the second quarter improved its losses compared to last year and reported stronger sales.

On Aug. 10, the CLEC showed net losses of $6 million, compared to $29 million during the same period a year earlier. Still, XO was deeper in the red this quarter than it was in the first, when it lost $4.5 million. XO didn’t say what accounted for the higher number, although expansion into new markets and the reality of the recession likely contributed.

Nonetheless, XO made big strides in its sales, which jumped to $385.6 million overall, a 5 percent increase from the second quarter of 2008. XO said its broadband services generated $195.4 million – 19.3 percent more than last year – of that revenue.

XO continued to see declines in its traditional legacy and TDM services, a trend the company expects as customers and suppliers move to IP.

The company also said it’s looking for ways to pay to redeem its Class A preferred stock. However, it wants to do so without incurring high-yield debt, which impedes competitive ability and comes with “unduly burdensome restrictive covenants,” XO said. The provider added it believes it has enough cash on hand and operating cash flow to fund operational cash needs.

Finally, XO is grappling with a proposal from its chairman, Carl Icahn. Icahn wants to buy all of XO’s outstanding common shares he doesn’t already own, for 55 cents per share. The offer was double XO’s market price on the day Icahn made the offer in July. XO has created a special committee to review Icahn’s proposal and hired J.P. Morgan Securities Inc. as its financial adviser in the matter.


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