May 16, 2003 : The webhost industry: week review

📅 May 16, 2003 - This week saw a number of major moves that left marks across the Web hosting industry landscape, as several companies announced acquisitions of businesses and assets, some hosting providers closed their doors while others re-launched, and one communications company announced a bankruptcy filing.

Late last week, Web hosting firm Feature Price was reported to have closed its doors after months of struggling business, customer complaints and strange circumstances. The company reportedly took its site offline in April, instead posting a letter telling customers that the company had closed. Since then, the site has been regularly going online and offline. The once-successful company began coming apart in December, following a falling-out between its founders. Management reportedly turned down several substantial acquisition offers, electing instead to let the company disintegrate.
On Thursday, Allegiance Telecom announced that it would pursue restructuring plans, having entered a filing under Chapter 11 of the U.S. bankruptcy code. The company believes the filing will help to facilitate its ongoing discussions with senior creditors and other stakeholders, allowing Allegiance to continue conducting business as usual. Allegiance says it has nearly a quarter of a billion dollars in cash, freeing it from the liquidity problems faced by most of the telecom companies that have recently filed for Chapter 11.
Along with the unpleasant business of shutdowns and bankruptcies from some companies, there was also some more positive news, including the re-purchase and re-launch of the Data Return Web hosting brand.
On Thursday, investment firm Saratoga Partners announced that it had secured a bid to acquire the managed hosting business belonging to divine Inc. in a bankruptcy court action. Saratoga says it will use the acquired business to re-launch the Data Return hosting brand originally acquired by divine, appointing Data Return founder Sunny Vanderbeck as CEO. Saratoga was upbeat about the acquisition, calling the managed services business one of divine's most valuable assets.
There were a number of other acquisitions announced this week at companies tied to the Web hosting business, including the purchase of another part of divine's operations.
On Wednesday, content management solutions provider FatWire Software announced that it had acquired divine's content management business at the company's bankruptcy auction in Boston. The acquisition includes divine's Content Server and Participant Server products, and its roster of more than 300 customers, including BusinessWeek, JP Morgan and Ford. The company says the acquired assets will complement and enhance its J2EE content management and software products.
Also on Wednesday, hosting provider NaviSite announced that it had won the bid to acquire the assets and selected liabilities of Interliant at a bankruptcy auction. Under the terms approved by the bankruptcy court, says NaviSite, the company will acquire assets and assume liabilities totaling approximately $6.2 million dollars. NaviSite has made several other acquisitions in the last several months, including ClearBlue Technolgies in December, Avasta in February and Conxion in April.
And on Thursday, IBM announced that it had acquired Toronto-based software developer Think Dynamics, though the financial terms of the deal were not disclosed. Think Dynamics develops system management and provisioning software designed to enable enterprises to quickly allocate resources to business needs. IBM says the acquisition will help the company to accelerate the development of its "on-demand" strategy, particularly the response times to changing business conditions.
After a week when so many assets changed hands, there will be a considerable number of Web hosting workers and customers spending the next few getting used to their new employers and suppliers. On top of that, after the closing of Feature Price, there will be others looking to find new ones.