E-Commerce Case

Accountants and financial analysts around the world have agreed to use XBRL to format financial statements and other reports. In about 300 words, outline the advantages that companies and financial analysts can obtain by using the XBRL standard. You can research this subject in your school library or online using your favorite search engine and the links provided for this exercise in the Online Companion.

101

Cases

C1. Covad

In 1996, three enterprising executives decided to leave their jobs at Intel and form a company that would take advantage of an opportunity provided by the recently enacted Telecommunications Act of 1996. The law eliminated the monopoly that local telephone companies had held and allowed other companies to offer telecommunications services to businesses and individuals in what had been the local telephone companies’ protected service areas. Because the goal of the company was to offer converged voice and data services, the founders named the company Covad. During its first two years, Covad became a solid regional company in the San Francisco Bay and Silicon Valley areas that sold Internet access to businesses and ISPs. Its ISP customers provided DSL access to smaller businesses and residential customers. But the Internet boom was in full swing, and in 1998, Covad hired U.S. West Senior Vice President Robert Knowling to take the company to the next level. Over the next two years, Covad raised more than $2 billion from stock and bond offerings and expanded into 98 metropolitan areas throughout the country. By the end of 1999, it had more than 200,000 customers, including AOL, MCI, and some of the fastest-growing regional ISPs in the country. It was following the lead of its main competitor, NorthPoint Communications (featured in this chapter’s Learning from Failures feature), and pursuing a strategy that included rapid expansion using external funds. In 2000, Covad’s largest customers, the ISPs that sold Internet access to smaller...