NorthPoint Communications Group, Inc. was a

competitive local exchange carrier A competitive local exchange carrier (CLEC) is a North American telecommunications provider classification that emerged based on the competition model of the Telecommunications Act of 1996 in the United States. The act required the previously esta ...

focused on

data transmission Data communication, including data transmission and data reception, is the transfer of data, signal transmission, transmitted and received over a Point-to-point (telecommunications), point-to-point or point-to-multipoint communication chann ...

via

digital subscriber line Digital subscriber line (DSL; originally digital subscriber loop) is a family of technologies that are used to transmit digital data over telephone lines. In telecommunications marketing, the term DSL is widely understood to mean asymmetric dig ...

s. The company had relationships with

Microsoft Microsoft Corporation is an American multinational corporation and technology company, technology conglomerate headquartered in Redmond, Washington. Founded in 1975, the company became influential in the History of personal computers#The ear ...

Tandy Corporation Tandy Corporation was an American family-owned Retail, retailer based in Fort Worth, Texas that made leather goods, operated the RadioShack chain, and later built personal computers. Tandy Leather was founded in 1919 as a leather supply store ...

Intel Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California, and Delaware General Corporation Law, incorporated in Delaware. Intel designs, manufactures, and sells computer compo ...

Verio Verio is a global web hosting provider headquartered in the United States. Incorporated in 1996 in Denver, Colorado, it is a wholly owned subsidiary of Nippon Telegraph and Telephone (NTT) Communications, which acquired the company in 2000. Ve ...

, Cable & Wireless, Frontier Corporation, Concentric Network, ICG Communications,

Enron Enron Corporation was an American Energy development, energy, Commodity, commodities, and services company based in Houston, Texas. It was led by Kenneth Lay and developed in 1985 via a merger between Houston Natural Gas and InterNorth, both re ...

, Network Plus, and Netopia. The company had investments from

The Carlyle Group The Carlyle Group Inc. is an American multinational company with operations in private equity, alternative asset management and financial services. As of 2023, the company had $426 billion of assets under management. Carlyle specializes in ...

Accel Partners Accel, formerly known as Accel Partners, is a global venture capital firm. Accel works with startups in seed, early and growth-stage investments. The company has offices in Palo Alto, California and San Francisco, California, with additional ope ...

Benchmark Benchmark may refer to: Business and economics * Benchmarking, evaluating performance within organizations * Benchmark price * Benchmark (crude oil), oil-specific practices Science and technology * Experimental benchmarking, the act of defining a ...

, and

Greylock Partners Greylock Partners is one of the oldest venture capital firms, founded in 1965, with committed capital of over $3.5 billion under management. The firm focuses on early-stage companies in consumer and enterprise software. History Greylock wa ...

History

The company was founded in 1997 by Michael W. Malaga and 5 other former executives of

Metropolitan Fiber Systems MFS Communications Company, Inc. (Metropolitan Fiber Systems) was a competitive local exchange carrier that owned and operated local network access facilities installed in and around major U.S. cities and several major European cities. MFS also ...

. On May 5, 1999, during the

dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...

, the company became a

public company A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in over-the-counter (finance), over-the-counter markets. A public (publicly traded) co ...

via an

initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investm ...

in which it sold 15 million shares at $24 per share. Malaga, then 34 years old, was worth $300 million on paper. In September 2000,

Verizon Verizon Communications Inc. ( ), is an American telecommunications company headquartered in New York City. It is the world's second-largest telecommunications company by revenue and its mobile network is the largest wireless carrier in the ...

agreed to acquire a 55% interest in the company and merge the companies'

DSL Digital subscriber line (DSL; originally digital subscriber loop) is a family of technologies that are used to transmit digital data over telephone lines. In telecommunications marketing, the term DSL is widely understood to mean asymmetric di ...

businesses. 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. After the earnings restatement, Verizon terminated its acquisition agreement, claiming that a

material adverse change In the fields of mergers and acquisitions and corporate finance, a material adverse change (abbreviated MAC), material adverse event (MAE), or material adverse effect (also MAE) is a change in circumstances that significantly reduces the value of a ...

had occurred. Northpoint sued Verizon to force it to complete the transaction. The lawsuit was settled out of court in July 2002, with Verizon agreeing to pay $175 million to Northpoint. NorthPoint stated that "it would cut its workforce by 19%, or 248 jobs, to lower expenses after the collapse of its merger with Verizon."

Bankruptcy

In January 2001, NorthPoint filed for

bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

. Some internet service providers, which faced a disruption in service, blamed the banks for failing to work out a deal to save the company. In March 2001,

AT&T Corporation AT&T Corporation, an abbreviation for its former name, the American Telephone and Telegraph Company, was an American telecommunications company that provided voice, video, data, and Internet telecommunications and professional services to busi ...

acquired the assets of NorthPoint for $135 million in a liquidation.

References

{{Dot-com Bubble 1997 establishments in California 1999 initial public offerings Defunct companies based in the San Francisco Bay Area Defunct telecommunications companies of the United States Defunct networking companies Dot-com bubble AT&T subsidiaries Internet service providers of the United States The Carlyle Group companies Companies that filed for Chapter 11 bankruptcy in 2001