Clark McLeod is back in news, and so is his telecom disaster McLeod USA. The company announced that it is putting up for sale, and unless it finds a buyer, the company will have to file for bankruptcy again. McLeod USA had filed for bankruptcy back in 2001 and had re-emerged in 2002. There were some doubts that this company could really make a go of it, despite the retrenchment. Things are equally bleak for some other telecom operators who filed for bankruptcy and have since re-emerged. XO and Birch are two such companies.

In the fourth quarter, the company racked up a loss of over $98 million, on sales of $162 million. The company has $45 million in cash and has to make $18 million in interest payments. “To me, McLeod’s current business, its size, market share and presence in the industry are insignificant,” says Ivan Feinseth, director of research at Matrix USA, a New York brokerage told Smart Money, “At this point, I don’t see them even registering on anyone’s radar screen, let alone as an acquisition candidate.” Still for companies looking to expand in smaller cities in the midwest might find McLeod a bottom-of-the-barrel kind bargain.

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Om Malik

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31 thoughts on “McLeod USA In Trouble Again”

  3. I have had some experience with MCLD as a service provider and they are a disaster. How do you lose $98M on $162M in Sales in one quarter? Seriously, that is hard to do.

  4. i agree with you. they and everyone like them needs to realize that its time to scale back and do things different. mcleod and others are selling nothing different and as a result they all seem commodity service offerings. anyway it is a matter of time before they vanish.

  7. Any ideas on who might buy them if anyone at all? The scary part is that their debt extension only goes to July. If they do not restructure their debt or get bought will they automatically default on the debt? Will that mean the liquidation of the company? Will their customers even get a 30 day notice of disconnect of services?

  9. anyone hear anything on McLeod lately? Only about two weeks until their debt repayment extension expires once again. Can a telecom company really declare Chapter 11 twice in a 4 year period?

  16. No service from my ISP – McLeod – again and with no explanation at all. I’ve allowed, since 1996, my business to remain with a company that can no longer maintain consistent, let alone somewhat frequent, access. This company once held so much promise but their management now seems most interested in misleading the very people who remained while contining to believe in McLeod’s mission.

  18. I have some startling inside info which may be wrong ( I am hoping ) but it comes from a very reliable source. It looks like the deathwatch may be premature. Back with more later

  19. We are a small company with about 100 phones. we have been using a McLeod T1 for about two years for dial tone and long distance. McLeod’s quality and service have been excellent. I am hoping they survive with minimal changes.

  20. I was laid off by McLeodUSA last year here in La. The last two employee’s in La. were laid off about a month ago. McLeodUSA is trying to get rid of everything they have in La. and maybe Texas too. Good riddens!

  24. I am willing to help any company looking to switch from McLeod services. XO is a nationwide provider of voice, internet, and long distance services. We are Tier One and have a similar product set to AT&T. Most importantly, we are a cash flow positive company. I have helped several companies transition from McLeod services. you may contact me at 612-312-1608.

  25. This last guy must have not read the article very well. They specifically mentioned XO as another company that in the same kind of trouble. If you really want to check out a good telecom look at Eschelon. Yah, I’m a rep., but they went public in August, really are cash flow positive and recently acquired ATI and Oregon Telecom, the stock just got upgraded. I’m glad to work there. Going on 4 years now, I bet that guy doesn’t even work there anymore… nope I just tried. Really call me 801-506-7273. I’m not going anywhere.

  28. The facts that we see daily in the news is that Telecom is going thru further consolidation and that the only survivors will have signicant size and depth.

    I left 21 years in Corporate Telecom to become a independant broker for 15 Telco’s-Customers need someone on their side to help them manage

    If you want true objectivity call Bulldog Communications who represents 15 Telecom firms from C-Lecs to I-Lecs in the Northwest.

    800-801-3376

  29. McCloud ihas my business phone number and refuses to export it to ATT in Chicago, Thus doing irreparable harm to my 8 year old business.

    Can anyone tell me how to force them to release a number they are not using.

  30. I know this is a late entry. I am a former McLead employee. Because of the flooding in Cedar Rapids, I wanted to check on the corporate office. Cassandra….file with your state’s attorney general. They should not be allowed to hold your number!

  31. I worked for McLeodUSA and was laidoff in 2001. From my perspective, as my office was literally ten feet from Clark McLeod’s office doors, he is a scam artist that took millions of dollars from honest hard working people. The man was found guilty for stock fraud. Should not that be enough for people to stay away from his promises. As I recall he sunk a ship in a pond on his property, so he could look at something while scuba diving, in the same week they laid off over a thousand people. Was buying the rights to the song “Simply The Best” for something like $10 million a good idea? Or my favorite, purchasing a second private jet two days after filing bankruptcy in 2001. How is it possible the people left in his wake have not been able to get this man in prison? At the very least he would some amount of containment as a junior high teacher, his former profession.

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