| 摘要 | Last week, Global Crossing, an enormous telecommunications company with more than $20 billion in assets, filed for Chapter 11 bankruptcy protection, one of the largest companies ever to do so. Recessions and bankruptcies are no strangers, and this recession has claimed countless small businesses and more than a few large companies from Enron to Kmart.
The bankruptcy of Global Crossing, however, has less to do with the economic recession than with the unmet expectations in telecommunications market and broadband markets in particular. Global Crossing may be the largest telecommunications company in bankruptcy, but it is neither the first nor the last. It joins the likes of Teligent, Winstar, Northpoint, PSINet, and Rhythms NetConnections, all of which filed for bankruptcy protection long before Sept. 11.
The domino quality of the bankruptcies lately has, naturally, made some politicians recoil and suggest that they reflect a fundamental problem with our financial institutions. But the inference should be exactly the opposite. The availability of bankruptcy protection, particularly for high-tech companies, not only enables them to remain in operation when times are bad but to attract both equity and debt financing to new but risky ventures when times are good. Global Crossing was just such a company.
Global Crossing was formed in 1997 by Gary Winnick and a group of highly pedigreed financial gurus and chief executive officers. Starting without assets, the company envisioned the construction of a global fiber broadband network connecting continents with undersea cables. In 1997, no such global fiber network existed, and no one knew how profitable–or unprofitable–it could be.
In the mid- and late-1990s, demand for international and transcontinental high-speed data services was growing at a staggering rate, seemingly faster than new fiber capacity could be built. At the time, the national fiber networks were primarily owned by AT&T, MCI and Sprint. New telecommunications companies such as Qwest, Level 3, and Williams planned to build nationwide fiber networks, on the assumption that businesses would be willing to pay a substantial premium for the option of access to this capacity. Global Crossing simply made its business plan even bigger–to take the fiber network global.
How much is a business plan worth, one without any immediate cash flow and one that any competitor could imitate? In the case of Global Crossing between 1997 and 1999, Wall Street put a high value on the idea and offered the blue-chip management team roughly $10 billion in debt and more than $40 billion in equity financing. At the time, few observers publicly complained that the valuations of Global Crossing, or several other now-defunct telecommunications companies, were wildly off the mark. Most investment analysts rated Global Crossing a strong “buy.”
The profitability of future new technologies and services, whether in pharmaceuticals or telecommunications, cannot be forecast with any accuracy. The market valuation of Global Crossing reflected a large premium for an option contract on future broadband fiber capacity.
If demand growth for broadband data services had continued to outpace supply of fiber networks, the Global Crossing business model of creating more capacity would have yielded great riches. But if supply outstripped demand and fiber capacity prices collapsed, so too would Global Crossing. The outcome could not be known in 1997.
In a capitalist economy, businesses are rewarded for anticipating consumer demand and developing new products and services to meet that demand. In the case of Global Crossing and other telecommunications companies, developing those products and services was an extraordinarily costly undertaking. Both the upside and the downside risk were great, and the latter would have been even greater without the protection of bankruptcy law, which provides some security for different classes of creditors. The risks were not easily diversified within each firm, but investors could and did diversify by holding a portfolio of other financial instruments.
Paradoxically, the greatest beneficiaries of Global Crossing’s risk-taking were not its shareholders, who will lose their entire investment, but Global Crossing customers and consumers generally. They have more high-speed data capacity available at lower prices than would have been the case if Global Crossing and other companies had made no investments. Rather than paying a premium for access to scarce capacity, customers today pay a decreasing price, insufficient to service Global Crossing’s debt. Thus, its revenues actually fell to $2.4 billion in the first three quarters of 2001 from $3.8 billion for the same period in 2000.
Bankruptcy protection means that the substantial Global Crossing investments in fiber networks will continue to operate, while its financial structure is renegotiated, to the mutual benefit of Global Crossing creditors and customers. Hutchison Whampoa of Hong Kong and Technologies Telemedia of Singapore have offered to provide the company with a new infusion of cash in exchange for a substantial restructuring of the debt and equity.
In the late 1990s, many ventures dreamed of building a world-wide fiber data network. Other capital markets could not as easily accommodate the scale and risk characteristics of Global Crossing and similar companies. The meteoric rise and fall of Global Crossing, while other ventures never got beyond the drawing board, is a testament to the strength–not the weakness–of American capital markets. Without our bankruptcy-protection laws, the ability of companies to attract investors to new but risky technologies would be substantially lessened.
Harold Furchtgott-Roth is a visiting fellow at AEI. |
