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NorthPoint Communications

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NorthPoint Communications Group, Inc.
Founded1997; 27 years ago (1997)
FounderMichael W. Malaga
Defunct2001; 23 years ago (2001)
FateBankruptcy, assets acquired by AT&T
HeadquartersCalifornia
Key people
Herman Bluestein
(Chief Development Officer)
Number of employees
506 (1999)

NorthPoint Communications Group, Inc. was a competitive local exchange carrier focused on data transmission via digital subscriber lines. The company had relationships with Microsoft, Tandy Corporation, Intel, Verio, Cable & Wireless, Frontier Corporation, Concentric Network, ICG Communications, Enron, Network Plus, and Netopia. The company had investments from The Carlyle Group, Accel Partners, Benchmark, and Greylock Partners.[1]

History

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The company was founded in 1997 by Michael W. Malaga and 5 other former executives of Metropolitan Fiber Systems.[2]

On May 5, 1999, during the dot-com bubble, the company became a public company via an initial public offering in which it sold 15 million shares at $24 per share.[3] Malaga, then 34 years old, was worth $300 million on paper.[2]

In September 2000, Verizon agreed to acquire a 55% interest in the company and merge the companies' DSL businesses.[4]

In November 2000, as its customers failed to pay their bills, NorthPoint restated downwards its financial performance for the third quarter of 2000, lowering revenue from $30 million to $24 million.[5][4] After the earnings restatement, Verizon terminated its acquisition agreement, claiming that a material adverse change had occurred.[4] Northpoint sued Verizon to force it to complete the transaction.[6] The lawsuit was settled out of court in July 2002, with Verizon agreeing to pay $175 million to Northpoint.[7] NorthPoint stated that "it would cut its workforce by 19%, or 248 jobs, to lower expenses after the collapse of its merger with Verizon."[8]

Bankruptcy

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In January 2001, NorthPoint filed bankruptcy.[9][10][11] Some internet service providers, which faced a disruption in service, blamed the banks for failing to work out a deal to save the company.[12] In March 2001, AT&T Corporation acquired the assets of NorthPoint for $135 million in a liquidation.[13]

In many ways, the rise and fall of NorthPoint mirrors the fate of one of its chief competitors: Rhythms NetConnections.

References

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  1. ^ "NORTHPOINT COMMUNICATIONS GROUP INC (NPNT) IPO". NASDAQ.
  2. ^ a b Sinton, Peter (May 12, 1999). "The Cash Just Keeps Coming / NorthPoint founder stays grounded". San Francisco Chronicle.
  3. ^ Vrana, Deborah (May 6, 1999). "This IPO Goes to Show: 'Dot-com' Is No Magic Bullet". Los Angeles Times.
  4. ^ a b c SCHIESEL, SETH (November 30, 2000). "Verizon Abandons NorthPoint Deal". The New York Times.
  5. ^ Young, Shawn (November 21, 2000). "NorthPoint Restates Earnings; Loss Could Affect Verizon Deal". The Wall Street Journal.
  6. ^ Lais, Sami (November 30, 2000). "Verizon, NorthPoint in heated dispute over DSL merger deal". Computerworld.
  7. ^ "Verizon Agrees to Settle NorthPoint Merger Suits". Los Angeles Times. Bloomberg News. July 24, 2002.
  8. ^ Staff, T. S. C. (7 December 2000). "NorthPoint Communications Unmoved by Layoffs". TheStreet. Retrieved 2020-04-28.
  9. ^ "NorthPoint files for Chapter 11". American City Business Journals. January 17, 2001.
  10. ^ Young, Shawn (January 17, 2001). "NorthPoint Communications Files For Chapter 11 Creditor Protection". The Wall Street Journal.
  11. ^ Weiss, Todd R. (January 17, 2001). "NorthPoint files for Chapter 11 protection". Computerworld.
  12. ^ Wagner, Jim (March 29, 2001). "ISPs React To NorthPoint's Imminent Shutdown". QuinStreet.
  13. ^ Young, Shawn; Solomon, Deborah (March 23, 2001). "AT&T to Acquire Most Assets Of NorthPoint Communications". The Wall Street Journal.
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