Founded | 1997 |
---|---|
Founder | Michael W. Malaga |
Defunct | 2001 |
Fate | Bankruptcy, assets acquired by AT&T |
Headquarters | California |
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]
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]
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.
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