Covad Communications –

SANTA CLARA, Calif. – Covad Communications Group Inc., a provider of high-speed digital communications services, went public January 21. The company offered 7.8 million shares at $18 apiece, well above its $12 to $15 filing range.

The offering, underwritten by Bear, Stearns & Co. Inc., BT Alex. Brown, Donaldson, Lufkin & Jenrette and Goldman, Sachs & Co., left 46 million shares outstanding.

There were no selling shareholders. Warburg, Pincus Ventures, Crosspoint Venture Partners 1996 and Intel Corp. were venture backers.

Covad provides high-speed communications services to Internet service providers (ISPs), who in turn provide business and consumer customers with high-speed Internet access, and enterprise customers, who use the services to provide employees with high-speed access to local area networks. ISP and enterprise customers include Cisco Systems Inc., Oracle Corp., Stanford University and Verio Inc. Covad’s services are available in Los Angeles, New York, Boston, Washington, D.C., and Seattle.

The estimated $130.5 million in proceeds from the IPO will be used to deploy the company’s networks in existing and new regions, to increase sales and marketing efforts and for general corporate purposes.

The company has not been profitable in the past several years, losing $28.3 million in the first nine months of 1998 and $2.6 million in 1997.

Rich Shapero, a general partner of Crosspoint Venture Partners, and Henry Kressel and Joseph Landry, managing directors of E.M. Warburg, Pincus & Co., were named to the company’s board of directors in July 1997.

Covad Communications – Selected Financial

(in thousands, except per share data)

Year Ended Three Months Ended Nine Months Ended

Dec. 31, 1997 Sept. 30, 1998* Sept. 30, 1998

Revenue 26 1,565 2,560

Net loss -2,612 -16,557 -28,261

Net loss per share -0.80 -2.75 -5.26

*Unaudited