Declining revenues in the fourth quarter of 2004 is actually a good news story for Global Crossing, company executives maintain.

The company announced yesterday that revenue for the fourth quarter of 2004 was $573 million, or about 8% less than revenues in the third quarter of 2004 and 16% down from the fourth quarter of 2003.

For the year, revenue was down 10% to $2.49 billion. But gross margin as a percentage of revenue was up 2% to 30% for the year. In addition, the company announced that with a December bond offer, Global Crossing's business plan is now fully funded, and the company expects to be EBITDA cash-flow positive in the second half of 2006.

The lower revenues and higher margins reflect Global Crossing's announced shift away from providing wholesale voice service to focusing on enterprise IP services, said Anthony Christie, Global Crossing's chief marketing officer.

"We have been taking decisive actions regarding the wholesale voice business," said Christie. "We operate a global, wholly owned IP/MPLS converged network. But here we are with a big portion of our revenue coming from voice. So we literally looked for our wholesale customers one by one. We asked if they were credit-worthy, if they were using manually intensive products, and if there was any chance of moving to VoIP. If the answer to the first two questions was yes and the third was no, we raised their prices."

These "surgical price increases" drove a lot of Global Crossing's margin improvement, even through the company did not see as much customer attrition as it expected, Christie said.

Revenue in the core enterprise business rose 8% in the fourth quarter.

Commercial services accounted for 44% of total revenues and 48% of that came from data services. Carrier services revenue accounted for 56% of revenues, down from 63% in the same quarter of 2003.

For the year, Global Crossing's adjusted EBITDA reflected a loss of $129 million, compared to $85 million in 2003. The adjusted EBIDTA for 2004 included $15 million in restructuring charges, $15 million in incentive compensation and $27 million attributable to the difference in non-cash stock compensation.