Global Crossing Limited is a telecommunications company that provides computer networking services worldwide. It maintains a large backbone and offers transit and peering links, VPN, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation and VoIP, to customers ranging from individuals to large enterprises and to other carriers. The main emphases are on higher margin layered services like managed services and VoIP with leased lines. Global Crossing is a tier 1 carrier.
Its core network delivers services to more than 700 cities in more than 70 countries and six continents around the globe.
Global Crossing was the first global communications provider with IPv6 natively deployed in both its private and public backbone networks. The company led the way in IP services with the first global deployment of MPLS-te and the first global MPLS-based IP VPN. In addition, Global Crossing also offered the first global multicast IP VPN service option, and the first converged IP solution (VoIP, IP Video, VPN, DIA).
The company is legally domiciled in Bermuda, although its administrative headquarters are in New Jersey.
Founding and early growth
Global Crossing was founded by Gary Winnick and three business associates in 1997 through Pacific Capital Group, Winnick's personal venture group, which had experienced mixed results in its twelve-year history. In 1997, Global Crossing raised $35 million of capital from the CIBC Argosy Merchant Funds (later Trimaran Capital Partners. The heads of the CIBC Argosy Merchant funds were former associates of Winnick from his days in the 1980s as a salesman at Drexel Burnham Lambert under Michael Milken. CIBC would ultimately realize a gain estimated to be $2 billion from its relatively small equity investment in Global Crossing, making it one of the most profitable investments by a financial institution in the 1990s.
From 1997 until 2002, Winnick held the title of chairman; Lodwrick Cook, former CEO of Atlantic Richfield Company (ARCO), was hired by Winnick in 1998 as co-chairman. John Scanlon became Global Crossing's first chief executive officer the same year. In what would become a trend with Global Crossing's chief executives, Scanlon's leadership was short-lived, and in February 1999, he was replaced by Robert Annunziata, who had resigned his position as president of AT&T's business services group to "build a company from start to finish." Annunziata oversaw the rapid expansion of the company, including the purchase of Frontier Corp. at a cost of $11.2 billion and the $850 million purchase of Global Marine Systems. After only a year though, in March, 2000, Annunziata resigned. During his time as CEO, Global Crossing had gone from a medium-sized company of about 150 employees to an international giant with over 14,000 employees.
Taking over as CEO, Leo Hindery, another AT&T executive, had joined the company a few months earlier as head of its webhosting division, GlobalCenter. Hindery took the helm at a critical turning point for the company. In March, the month Hindery assumed command, Global Crossing's stock had reached a high of $61 per share. A month later, however, the stock price had fallen to just $25 a share. The company's filing for an offering of $2.5 billion in common and convertible preferred shares was cut in half. Many of the original investors bailed out at that time as well, cashing out most or all of their holdings for astounding gains. Gary Winnick, who continued with his company, himself made another $260 million at the April, 2000 stock offering. CEO Hindery projected the company would be cash-flow positive by early 2002, but two months later, in October, 2000, he quit, submitting his resignation after just seven months with the company. This took place after the sale of the GlobalCenter division to Exodus Communications, in a deal in which Hindery made $251 million.
Hinderey was replaced by Thomas Casey, a forty-eight year old lawyer who came to Global Crossing from Merrill Lynch, where he was co-head of the global telecom investment banking group. Prior to that time, Casey had worked as an attorney for the Federal Communications Commission and the Department of Justice. Reports by individuals close to the company to the media suggested conflicts and power-struggles between Mr. Winnick and CEOs Annunziata and Hindery.
Post-2001 and 2002 bankruptcy filing
Global Crossing was generating a great deal of publicity through things like its NASCAR racing sponsorship and the rescue attempt of a Russian submarine, but its business triumphs were lacking. By early 2001, emerging telecommunications carriers and online businesses - two groups Global Crossing had been relying on to build traffic on its network - were fading fast. Walt Disney withdrew from its money-losing site Go.com and eToys announced it was running out of cash. Additionally, the parade of telecom companies filing bankruptcy began that year, including Global Crossing customers Northpoint Communications Group and GST Telecommunications. Nevertheless, CEO Casey projected continued financial growth with targets at thirty percent in 2001, the year the company's vice president of finance, Roy Olofson, claimed later he had voiced concerns about alleged "last-minute swap transactions" with customers from whom Global Crossing also purchased services. The deals noted by Olofson included a $100 million exchange of capacity with Qwest and a $200 million sale to 360Networks, from whom Global Crossing purchased $150 million of capacity. Global Crossing claimed Olofson's allegations were false, and that he had threatened to file a lawsuit against the company if he was not paid a substantial amount of money. The company stated that its financial and reporting items had been reviewed both internally and by the company's auditor, Arthur Andersen.
In June, 2001, Global Crossing completed its core network, spanning four continents, 27 countries and 200 major cities. The same month, it completed the sale of its local telephone-company business on June 29. Casey's confidence in the company's strength seemingly maintained that of many investment bankers and investors. Third-quarter filings for 2001, however, were considered disappointing, and Global Crossing announced plans to dispose of Global Marine. It was announced that Asia Global Crossing, of which Global Crossing owned fifty-nine percent, had entered discussions to merge in October 2001, after John Legere, Asia's CEO, became head of both companies. The merger discussions ended in November 2001 and Legere was replaced as Asia Global Crossing CEO in January 2002 and was removed from the Asia Global Crossing board in April 2002.
By this time, the finance world was losing confidence rapidly, and Global Crossing's stock price continued to fall, hitting five dollars a share by November, 2001. On December 20, it was revealed that Asia Global Crossing had requested $400 million from a credit line granted at its spinoff in 2000 by Global Crossing. Global Crossing refused to fund the line and a month later, in January, 2002, the company filed for Chapter 11 bankruptcy protection and its assets were ultimately sold to Asia Netcom, a subsidiary of China Netcom. At the same time, a letter of intent was filed by Global Crossing to sell control of the company, seventy-nine percent, to a joint venture between Hong Kong-based Hutchison Whampoa and Singapore Technologies Telemedia. Global Crossing's bankruptcy filing listed total assets of $22.4 billion and debts amounting to $12.4 billion. If ranked by assets, Global Crossing's bankruptcy is the seventh largest filing in American history.
On January 28, 2002, Global Crossing announced that it signed a letter of intent with Hutchison Whampoa Limited and Singapore Technologies Telemedia Pte. Ltd. (ST Telemedia) for a cash investment for a joint majority stake in the company's equity in connection with a restructuring of the company's balance sheet.
In April 2003, ST Telemedia announced it would assume the rights and obligations of Hutchison to invest in Global Crossing, increasing its original investment of 61.5 percent ownership interest in the reorganized Global Crossing.
New Global Crossing Emerges in 2004
After obtaining all necessary regulatory approvals, Global Crossing emerged from restructuring on December 9, 2003, with its core network intact, and a streamlined business model in place. The newly restructured Global Crossing began trading on NASDAQ on January 22, 2004, under the symbol GLBC.
Since then, Global Crossing has continued to execute on its streamlined business model by completing the sale of portions of the business that were not part of the company’s “invest and grow” strategy, and acquiring two companies to augment Global Crossing’s assets.
In October 2006, Global Crossing announced the acquisition of UK-based Fibernet, followed two weeks later with the announcement of its intention to also acquire Impsat, a leading provider of telecom and Internet services in Latin America.
Fibernet's roster of enterprise and carrier customers in the financial, insurance and retail segments complements Global Crossing's market position in the UK government and rail sectors. The acquisition of Impsat brings Global Crossing a local presence in seven Latin American countries, Impsat’s 10,000 kilometer, extensive IP-based inter-regional network, 15 metropolitan networks and 15 advanced hosting centers, which provide additional services to Global Crossing’s Latin American operations.
Corporate and executive spending
Global Crossing's rapid rise and fall a
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