They once were superstars, and then they were some of the biggest disasters in Washington technology. Now, as survivors, they're trying ambitious turnarounds. But when the names Teligent, USinternetworking and MicroStrategy are mentioned, I often hear: "Are they still alive?" They are, having endured bankruptcy or other financial troubles.

These companies have made drastic cuts in budgets and staff, and they've changed the way they do business. Now, those that have emerged from near-death experiences look like entirely different companies, which can only be a good thing.

Teligent

Former chief executive Alex Mandl doesn't have anything to do with the fixed-wireless telecom company anymore -- he's running Gemplus in France. At Teligent's helm is James Continenza, a former Lucent executive who knew Mandl at AT&T and who assumed the CEO role in 2000.

Teligent, which sells high-speed wireless telecommunications and Internet service that use a microwave communications network, came out of bankruptcy in September and is now privately owned by 35 banks and other financial institutions, many of them its former creditors. J.P. Morgan Chase and Toronto Dominion Bank are the majority owners. As a private firm, the company doesn't publicly report whether it's making a profit.

Investors lost big on Teligent, but it didn't liquidate as did so many of its competitors, including arch rival Winstar. The restructuring erased $1.65 billion of debt, leaving the company virtually debt-free. But Teligent's history is hardly a rosy picture.

"A lot of people lost a lot of money, and that's very unfortunate," says Continenza. "The creditors are out hundreds of millions. This is not a dream recovery."

What Teligent has found is that it can still get customers, says Denisse Goldbarg, vice president of marketing at the company. She says potential clients have certainly been nervous about the industry, but Teligent maintains 2,500 customers.

"We're like a start-up without the growing pains of a start-up," she says. One good thing about a forced restructuring, of course, is that the management team must take a close look at what it owns and whom it employs. It has the opportunity to slice and dice to create a better company.

Two years of taking the business apart piece by piece has produced some drastic cuts. Teligent now has fewer than 100 employees, down from 3,400 at its height. The vast offices, one of which was in the tony "Tiffany" building in Tysons Corner, have been consolidated to a single space in Herndon.

Continenza says running Teligent these days is like when you've personally hit financial tough times and you have to cut out as much as you can. "For our business, this is like living in the recession/depression years," he says.

USinternetworking

USinternetworking entered Chapter 11 last year with $210 million in debt and emerged from bankruptcy in May when private equity firm Bain Capital took ownership of the company through an $81 million investment. The Annapolis company now has about $60 million in debt. The restructuring wiped out USinternetworking's shareholders, and Christopher McCleary, who was chief executive during the most trying times, is no longer associated with the company.

Andrew Stern, who joined the company in 1998 as chief financial officer, took the reins as CEO in 2000. "Chris was the right person at the right time," says Stern. Of course, times changed.

"We needed to move from visionary to nitty-gritty," Stern says, and he does not pretend that things have been great. "The market is still tough."

Stern has made huge cuts, consolidating five data centers to two and scaling down from 1,400 employees to 500 today.

"The restructuring was all about the balance sheet," he says. Every little bit counts. "You don't see us advertising in the Wall Street Journal these days."

When Bain invested in USinternetworking, which sells software online to businesses, it merged the company with another firm it owned, Interpath. Stern says that integration was just completed this month and has helped USinternetworking sign new customers, including L'Oreal USA and Sunoco.

Stern says there have been some "hiccups" along the way, especially as clients of either USinternetworking or Interpath have taken some time to get used to working with new people. The company has about 130 customers now, says Stern.

The toughest time, he says, was from fall 2001 to summer 2002, when the company found potential customers worried about signing on because they feared USinternetworking might not be around much longer.

Stern was CFO during USinternetworking's initial public offering and fondly remembers those heady times. But now, being a private company makes things easier, says Stern, because it takes his company away from the spotlight, which shone especially brightly as the stock plummeted. "We were too small and too volatile to be a public company," says Stern. "There's not a lot of credibility when your company is trading in single digits."

The plan now is to simply sell as much software as possible to the point that in a few years, management could think about going public once more, he says. The word he keeps coming back to is "momentum." Stern hopes USinternetworking will find it again. He acknowledges there's a hard road ahead.

"We've got to start this company growing for real again," he says.

MicroStrategy

Unlike Teligent and USinternetworking, MicroStrategy of McLean never went bankrupt. But the Securities and Exchange Commission sued it for alleged accounting fraud, saying it had reported profits when in fact it was losing money. In 2000, CEO Michael J. Saylor, co-founder and chief operations officer Sanju K. Bansal, and one other MicroStrategy executive agreed to pay fines of $350,000 each to settle, without admitting or denying wrongdoing. MicroStrategy was forced to restate three years of results, news that battered the company's stock and gave it a massive credibility problem with customers and Wall Street.

Also unlike the case at the other two companies I mentioned, MicroStrategy's CEO during its toughest times is still at the helm of the company. Saylor and Bansal took MicroStrategy through several restructurings that included spinning off or shutting down tangential businesses and reducing the staff from 2,400 people to 819. The company is still doing data mining, but it has shuttered offshoots like Strategy.com, which was to deliver news and information via wireless devices.

Now, MicroStrategy executives are saying the turnaround is complete, having just announced the company's fourth profitable quarter in a row -- although the profits have come largely from special gains. Things are looking up in the company's industry, as competitors such as Business Objects SA, Crystal Dimensions and Acuate have posted profits for the fourth quarter of 2002. But it's still unclear how much the past will haunt MicroStrategy.

The measured Bansal, who has taken over most of the public speaking from Saylor, says he expects 2003 to be MicroStrategy's first "growth" year since 1999, meaning the first where things are moving ahead rather than being taken apart, fixed and reassembled. He says 2001 was all about restructuring and 2002 was spent showing Wall Street the company was back with a tighter budget and above-board financials.

"In '03 we'd like to achieve moderate growth once again," Bansal says, a more tempered goal than many of the company's declarations several years ago when it wanted to change the world.

"It's not sexy, but it's what makes the business work," Bansal says.

It's too soon to declare any of these companies a success or failure in their turnaround efforts. But by the end of 2003, they will have much to show, one way or the other.

Shannon Henry's e-mail address is henrys@washpost.com.

Founder Michael J. Saylor has kept his job as MicroStrategy CEO.