January 17, 2001, 1:02 PM — NorthPoint Communications Group Inc. Tuesday announced it has filed for Chapter
11 bankruptcy protection, less than two months after Verizon terminated its
merger agreement with the San Francisco DSL wholesaler. Also Tuesday, DSL wholesaler
Rhythms NetConnections of Englewood, Colo., announced plans to focus on fewer
markets and lay off about 23 percent of its workforce.
NorthPoint CEO Elizabeth Fetter says her company will continue to provide DSL
service to its customers. She explained that the Chapter 11 filing will give
NorthPoint time and financial resources to allow the company to continue operating
until it finds a strategic partner.
Fetter placed the blame for her company's financial problems on Verizon. Approximately
six weeks ago, Verizon canceled a previously announced merger agreement with
NorthPoint, citing NorthPoint's worsening financial position and business operations.
NorthPoint subsequently sued Verizon, saying that Verizon had no basis to cancel
the merger.
Meanwhile, Rhythms became the last of the three large national DSL wholesalers
to announce cutbacks; Covad and NorthPoint made major workforce cuts late last
year.
Rhythms now plans to concentrate its efforts on its 40 largest markets, which
encompass about 40% of the homes and 45% of the businesses in the U.S. By refocusing
its efforts and scaling back its workforce, Rhythms expects to cut its 2001
expenses by about $80 million.
