Aug 29, 2003 : The webhost industry: week review

📅 August 29, 2003 - It was a high-impact week in Web hosting, as several major legal matters were revealed, a number of mergers and acquisitions were announced, and several companies introduced significant new products and services.
On Monday, Web hosting firm CI Host announced that it had been awarded a restraining order against America Online, designed to prevent the ISP from blocking email from CI Host's IP addresses to AOL subscribers. AOL, which began blocking the email around August 12, has not yet complied with the order issued August 22, according to CI Host. The company says it is seeking an order of contempt to force AOL to comply with the previous order, and intends to seek monetary damages.
On Thursday, it was reported that felony charges have been filed against telecommunications giant WorldCom, and six of its former employees. The company, and six former employees including CEO Bernard Ebbers, CFO Scott Sullivan, controller David Myers, director of general accounting Buford Yates Jr., director of management accounting Betty Vinson and director of legal accounting Troy Normand were charged in Oklahoma County District Court with 15 counts of violating the Oklahoma Securities Act.
But, while it suffered legal strife, WorldCom continued to work through the process of reorganizing under the name MCI, announcing several other developments in recent weeks, including an important effort at acquisition.
On Wednesday, MCI announced that it has commenced a tender offer to purchase all the outstanding shares of class A common stock of Digex not already owned by MCI and subsidiaries for $0.80 per share. A special committee of Digex's board of directors has recommended to shareholders that the offer be accepted. MCI, which already holds a 60 percent stake in Digex, obtained authorization for the offer from the US Bankruptcy Court for the Southern District of New York.
Also on Wednesday, private label hosting firm Inquent Technologies announced that it had been sold to technology holding firm Mallory Ventures Inc. Mallory Ventures' portfolio also includes application management and support company Inforonics. Specific details of the agreement were not released, but Inquent representatives said further details would be forthcoming.
On Tuesday, Hostway announced that it had purchased dedicated hosting and colocation provider Neutelligent. According to the terms of the deal, Hostway acquired all of Netelligent's assets, including its hosting facility, staff and existing customer base. Financial terms of the agreement were not disclosed. Hostway says the deal provided it with a new data center and ?ample expansion space.? The Florida facility will operate as a Hostway subsidiary offering colocation and complex hosting to medium and large clients.
And on Monday, McDATA Corporation announced agreements to acquire IP storage networking solutions provider Nishan Systems and enterprise storage networking company Sanera Systems. Along with the two announcements, McDATA said it had entered an agreement with Aarohi Communications to provide technology for McDATA's intelligent switch platforms. McDATA will pay $83 million in cash for Nishan Systems and assume approximately $2 million in debt, and will pay about $102 million in cash for Sanera.
Along with a significant number of acquisitions, this week saw a slightly smaller number of important new product releases.
On Thursday, data center automation firm Opsware introduced version 4.0 of its Opsware System automation suite, including 15 new features for cost reduction, consolidation, platform migrations and data center security. The company says the new release gives customers the ability to automate complete server and application life cycle across Windows, Unix and Linux environments using a new point-and-click interface.
And on Wednesday, Network Solutions Inc. announced that it would begin accepting pre-orders for its new Next Registration Rights service, a tool for automatically obtaining registration for a currently registered .com or .net domain name if it is not renewed during the subscription period. The company said the service, scheduled to go live in October of 2003, is the first of its kind.
This week was one of the most concentrated weeks of significant news in recent months for the Web hosting industry. Particularly noticeable was the large-scale return of MCI to headlines after several months spent under the radar.