Shares of NorthPoint Communications have plunged since Verizon Wireless called off its agreement to combine their digital subscriber line businesses. At the close of trading Thursday, NorthPoint reached a new 52-week low of 59 cents, after shares dropped 70%--topping the previous low of $1 set just the day before when Verizon canceled the deal, citing a deterioration in NorthPoint's financial condition.
In a brief teleconference with investors, NorthPoint president and CEO Elizabeth Fetter said the company is evaluating its options and is focused on obtaining "equity investments from strategic investors." A wise move for a company that doesn't have enough money to sustain its business, says Sands Brothers analyst Andrew Hornick. "NorthPoint needs a partner or financing, or they're gone," Hornick says.
NorthPoint intends to challenge Verizon's withdrawal from the original agreement, which called for the merger of both companies' DSL businesses and for Verizon to provide NorthPoint with $200 million in interim financing. "We do not believe Verizon is entitled to terminate our merger agreement or our agreement to provide interim financing," Fetter said. Fetter abstained from commenting on any legal action the company might take.