Updated from 12:45 p.m. EDT
, a purveyor of Internet access and Web hosting services, on Friday offered a more pessimistic financial outlook for the rest of the year, citing a slowdown in some of its businesses and the effects of a recent acquisition.
Shares of PSINet, which have fallen sharply from a 52-week high of $60.94, finished Friday regular trading down $2.69, or 19%, at $11.75 after reaching a 52-week low of $12.63 in intraday trading.
PSINet, based in Ashburn, Va., said it now expects to record revenue between $920 million and $960 million in the second half of the year, and earnings before interest, taxes, depreciation and amortization, or EBITDA, between $5 million and $15 million. Although the numbers compare favorably with those of last year, Wall Street had hoped for more.
One analyst, Riyad Said of
Friedman Billings Ramsey & Co.
, said he initially had anticipated revenue of $980 million and EBITDA of roughly $30 million in the latter half of 2000. Analysts at
CIBC World Markets
, meanwhile, had made an even more bullish prediction, expecting $1 billion in revenue and $75 million in EBITDA.
Explaining its forecast, PSINet said it anticipated weakness in its carrier access business, which faces increasingly stiff competition, and it pointed to a recent announcement from
, an Internet consultant that said it would report lower-than-expected revenue in the third quarter.
With its acquisition of information technology provider
, which was completed in mid-June, PSINet obtained an 80% stake of Xpedior, one of many companies struggling to offset weaker demand from dot-com firms.
David Moir, PSINet's vice president of finance, said in an interview that the company, shifting its focus from Internet access to the high-margin, high-growth realm of Web hosting, is inspired by its prospects.
"I want to emphasize that we are a transformed company," he said. "In less than a year, we've gone from being a traditional Internet service provider to now being a Web hosting, e-commerce company."
But Moir added that the company likely will need an additional $600 million in financing to accomplish its new strategy and meet the mounting demand for Web hosting services.
Morgan Stanley Dean Witter
cut its rating on the company's stock Friday to neutral from strong buy.