Jul 12, 2002 : The webhost industry: week review
📅 - This week was another in which the troubled telecom sector took center stage, as some companies took steps to deal with mistrust and investigation while others repositioned themselves to take advantage of the substantially more level playing field that could come as a result of WorldCom's struggles.
Former executives from WorldCom were called in to testify at a Monday meeting of the House Financial Services Committee. Former CEO Bernard Ebbers and Former CFO Scott Sullivan were served with subpoenas ordering them to appear at the hearing. Both Ebbers and Sullivan exercised their Fifth Amendment rights, refusing to testify in order to avoid incriminating themselves.
Later in the week, House Energy and Commerce Committee chairman W.J. Tauzin said that Sullivan had told WorldCom lawyers that he had informed Ebbers of his improprieties with the company's balance sheets. Ebbers's lawyer said the former CEO was not made aware, and that he thought Sullivan had confirmed that.
As WorldCom continues efforts to rally creditors, customers and the public at large in its battle against a bankruptcy, the prospect of a filing seems to grow more imminent, and its consequences more apparent.
Statistics and analytics firm TeleGeography released a report this week identifying WorldCom's voice and data network as responsible for more bandwidth, connections and revenue than the network of any other organization.
According to Telegeography's research, WorldCom operates 30 percent of the bandwidth on the 20 largest US Internet backbone routes, along with connecting over 3,400 networks and accounting for at least 30 percent of the wholesale US backbone access market, through its UUNet business unit.
WorldCom has said it plans to reorganize without selling any assets, but it wouldn?t be surprising, at this point, to see parts of the powerful network end up in the hands of another organization.
While WorldCom's troubles are undoubtedly the most notable in the telecom sector, they certainly aren?t exclusive to that company.
Qwest Communications announced on Monday that chairman and CEO Richard Notebart, appointed to reshape and refocus the company, has begun to do just that. Qwest said the company has been reorganized around three market-facing business units, including consumer markets, business markets and wholesale markets groups.
Notebart also appointed Oren G. Shaffer as vice chairman and chief financial officer, as well as Joan H. Walker and Gary R. Lytle as VPs.
While some telecoms? immediate goals are getting through the woods, others are in a much better position to capitalize on opportunities that the industry's woes might produce.
Level 3 communications is one of those companies, especially considering the company's announcement of a $500 million round of investment, led by billionaire investor Warren Buffet.
Level 3 said it was offering 10-year convertible notes in exchange for investment from $300 million from Longleaf Partner Funds and $100 million each from Legg Mason and Buffet's Berkshire Hathaway.
In a somewhat less welcome investment, Billionaire financier Carl Icahn reportedly made a $331 million bid to acquire a substantial amount of the bank debt of bankrupt telecommunications firm XO Communications. If the deal were successful, it would make Icahn one of XO's most senior creditors, giving him considerable say in the company's future.
And while the troubles of the telecommunications sector have been driving down the value of communications companies across the board, several long-suffering Web hosting firms with already-low values received bad news from the Nasdaq this week.
On Wednesday, Web hosting firm NetNation said that it had received notification from the Nasdaq that it fails to comply with the market's minimum $1 share price. In accordance with standard practices, the company said it was given 180 days, or until January 6, 2003, to comply with the minimum requirements for a minimum of 10 consecutive days or face delisting.
Shortly thereafter, managed infrastructure provider Interliant announced that it had been notified that its appeal to the Nasdaq Listings Qualifications Panel was denied, and that shares in the company would no longer be listed on the market. The company's shares were immediately eligible to be traded on the NASD-regulated OTC Bulletin Board.
With new investment coming in to companies in the telecommunications market, and other companies facing critical decisions about their future plans in the coming days, it would not be surprising to see assets changing hands before long. And as investigations continue into the likes of WorldCom and Qwest, the telecommunications companies will likely continue to occupy the attention of the Web hosting industry.
Former executives from WorldCom were called in to testify at a Monday meeting of the House Financial Services Committee. Former CEO Bernard Ebbers and Former CFO Scott Sullivan were served with subpoenas ordering them to appear at the hearing. Both Ebbers and Sullivan exercised their Fifth Amendment rights, refusing to testify in order to avoid incriminating themselves.
Later in the week, House Energy and Commerce Committee chairman W.J. Tauzin said that Sullivan had told WorldCom lawyers that he had informed Ebbers of his improprieties with the company's balance sheets. Ebbers's lawyer said the former CEO was not made aware, and that he thought Sullivan had confirmed that.
As WorldCom continues efforts to rally creditors, customers and the public at large in its battle against a bankruptcy, the prospect of a filing seems to grow more imminent, and its consequences more apparent.
Statistics and analytics firm TeleGeography released a report this week identifying WorldCom's voice and data network as responsible for more bandwidth, connections and revenue than the network of any other organization.
According to Telegeography's research, WorldCom operates 30 percent of the bandwidth on the 20 largest US Internet backbone routes, along with connecting over 3,400 networks and accounting for at least 30 percent of the wholesale US backbone access market, through its UUNet business unit.
WorldCom has said it plans to reorganize without selling any assets, but it wouldn?t be surprising, at this point, to see parts of the powerful network end up in the hands of another organization.
While WorldCom's troubles are undoubtedly the most notable in the telecom sector, they certainly aren?t exclusive to that company.
Qwest Communications announced on Monday that chairman and CEO Richard Notebart, appointed to reshape and refocus the company, has begun to do just that. Qwest said the company has been reorganized around three market-facing business units, including consumer markets, business markets and wholesale markets groups.
Notebart also appointed Oren G. Shaffer as vice chairman and chief financial officer, as well as Joan H. Walker and Gary R. Lytle as VPs.
While some telecoms? immediate goals are getting through the woods, others are in a much better position to capitalize on opportunities that the industry's woes might produce.
Level 3 communications is one of those companies, especially considering the company's announcement of a $500 million round of investment, led by billionaire investor Warren Buffet.
Level 3 said it was offering 10-year convertible notes in exchange for investment from $300 million from Longleaf Partner Funds and $100 million each from Legg Mason and Buffet's Berkshire Hathaway.
In a somewhat less welcome investment, Billionaire financier Carl Icahn reportedly made a $331 million bid to acquire a substantial amount of the bank debt of bankrupt telecommunications firm XO Communications. If the deal were successful, it would make Icahn one of XO's most senior creditors, giving him considerable say in the company's future.
And while the troubles of the telecommunications sector have been driving down the value of communications companies across the board, several long-suffering Web hosting firms with already-low values received bad news from the Nasdaq this week.
On Wednesday, Web hosting firm NetNation said that it had received notification from the Nasdaq that it fails to comply with the market's minimum $1 share price. In accordance with standard practices, the company said it was given 180 days, or until January 6, 2003, to comply with the minimum requirements for a minimum of 10 consecutive days or face delisting.
Shortly thereafter, managed infrastructure provider Interliant announced that it had been notified that its appeal to the Nasdaq Listings Qualifications Panel was denied, and that shares in the company would no longer be listed on the market. The company's shares were immediately eligible to be traded on the NASD-regulated OTC Bulletin Board.
With new investment coming in to companies in the telecommunications market, and other companies facing critical decisions about their future plans in the coming days, it would not be surprising to see assets changing hands before long. And as investigations continue into the likes of WorldCom and Qwest, the telecommunications companies will likely continue to occupy the attention of the Web hosting industry.
Reads: 1933 | Category: General | Source: TheWHIR : Web Host Industry Reviews
URL source: http://www.thewhir.com/marketwatch/wrap071202.cfm
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