Third Quarter 2004 Results Reported For Covad

Covad Communications Group, Inc. (www.covad.com) reported revenue for the third quarter of 2004 of $105.7 million, a five percent increase over the $100.5 million reported in the third quarter of 2003, and a decrease of $1.6 million from the second quarter of 2004.

"The third quarter was significant for Covad as we experienced positive momentum with a return to positive broadband line count growth as well as significant growth from Covad VoIP services. As we develop new markets, our aggressive nationwide rollout of Covad VoIP should continue to drive revenue growth," said Charles Hoffman, president and chief executive officer of Covad.

Covad ended the third quarter with 373 business customers that have chosen the company's leading small business Covad VoIP solution, a 20 percent increase over the 311 customers at the end of the second quarter 2004.

During the third quarter, line count from stand-alone broadband services increased by 10,500 lines ending the third quarter with approximately 524,900 lines in service. This is compared to a net decrease in lines of approximately 1,000 lines in the second quarter of 2004.

The company reported net loss for the third quarter of 2004 of $13.8 million, or $0.05 per share, as compared to a net loss of $33.4 million, or $0.15 per share in the third quarter of 2003, and a net loss of $7.4 million, or $0.03 per share for the second quarter of 2004.

Loss from operations for the third quarter of 2004 was $15.3 million, compared to $32.2 million in the third quarter of 2003 and $6.7 million for the second quarter of 2004.

"We will continue to fuel sales for Covad VoIP services through our new VoIP advertising campaign launched in September. We have also expanded our national reseller base by adding 84 new Covad VoIP channel partners in the third quarter," added Charles Hoffman.

During the third quarter 2004, Covad expanded the availability of Covad VoIP service to 46 markets with 11 more added in October bringing total markets served to 57.

By the end of the year, the company plans to complete the launch of Covad VoIP in all major metropolitan areas served by the company's national footprint. The growth in Covad VoIP services during the third quarter 2004 was captured in the existing three markets served at the time of the GoBeam acquisition at the end of the second quarter.