PSINet: A heavyweight rocked back on its heals

Beating auditors PricewaterhouseCoopers to the crunch, the global ISP released a statement admitting it is broke and likely to file for bankruptcy.

Despite selling a business unit for $300m just a month ago, cash reserves are now down to $254m, and as lucrative international accounts such as easyEverything depart, the future hardly looks golden.

The news didn't come as a surprise to the US Securities and Exchange Commission (SEC) who had already been warned auditors are likely to issue a 'going concern qualification' on the company.

The SEC has granted PSINet a 15-day extension on submitting its annual report to allow for an independent valuation of assets.

But it won't make much difference. By the company's own admission there is no cash in the coffers, and it's hard to see a revival of fortunes.

As PSINet counts the days to an increasingly likely demise it can also count itself as one of a dying breed of ISPs.

It wasn't alone in missing its annual report deadline. US broadband outfit Covad also missed its deadline due to "complex accounting issues".

And only last week DSL wholesaler NorthPoint left MSN's DSL service in the lurch after selling part of its assets to AT&T.

Level 3 also announced today that it is to lay off 325 people - six per cent of its workforce.

It's not a new pattern. In a different field, many e-tailers have realised they need the clout of bricks and mortar firms behind them. As ISPs take a battering, the backing of an established telco seems essential. After all, apart from PSINet, which other major ISPs can any longer claim to be independent, facilities-based operations?