Nov 29, 2002 : The webhost industry: week review

📅 November 29, 2002 - With a few obvious exceptions, many of the most influential organizations in the Web hosting industry have been quieter than usual of late. In many cases, the quiet public faces have been the result of energetic internal efforts to resolve the rather pressing difficulties facing many of these companies. But this week saw some very significant announcements, as several major communications firms made significant steps toward resolving negative issues facing their companies.
Data carrier Genuity aroused suspicions late last week that it was coming close to a solution when it announced a three-day extension by its lenders for negotiations to restructure the $2 billion in debt it was in default of. The three-day extension came following a series of similar announcements by the company, regarding longer ten-day or two-week extensions.
It seems the three days were used efficiently, as on Thursday the company announced that it had completed negotiations of a plan that will see the company file for bankruptcy and subsequently sell all of its assets to deep-pocketed communications firm Level 3 Communications. To acquire Genuity's assets and operations, Level 3 will pay up to $242 million in cash and assume a significant portion of certain long-term operating agreements.
Also on Thursday, embattled telecommunications company WorldCom announced that it has reached an agreement that will resolve claims brought against the company in the Securities and Exchange Commission's civil suit regarding WorldCom's past accounting practices. According to the agreement, the company neither denies nor admits to the allegations, and agrees to abide by a series of rules, including: not violating securities laws in the future; providing training to senior officials to minimize the possibility of future violations; retaining a consultant to review the company's internal accounting; and having the company's corporate governance and ethics policies reviewed by the case's corporate monitor.
Shortly after announcing plans for major restructuring, UK-based communications company Cable & Wireless said on Tuesday that the company's chairman-designate David Nash had backed down from his pending appointment as chairman. After recent meetings with shareholders, Nash, who was scheduled to take over the position in 2003, said it would be inappropriate for him to take on the role. Instead, he will quit the board entirely at the end of the year, and current chairman Ralph Robbins will defer his retirement until a new chairman is brought in from outside the company.
Along with the conclusions reached at the major communications firms, the Web hosting industry saw a number of more ordinary announcements this week as well, including an executive appointment and several notable new products.
On Tuesday, routing service provider Internap announced that it had appointed former AT&T and Covad executive Marla Eichmann as its vice president of operations. The company says Eichmann will be responsible for managing the company's customer installation, maintenance and field operations staff, including the company's network operations center and colocation operations.
On Monday, software developer SWsoft announced that it has released its Enterprise Control Center product, designed to enable hosting providers to offer utility-like computing services to customers. When used with SWsoft's Virtuozzo server virtualization software, says the company, ECC can manage, create and remove virtual environments on one or more Linux-based servers, allowing businesses to access and pay for only the resources they need.
And on Thursday, Hostway announced that it has launched a series of seminars for small businesses this month, with its inaugural presentation, ?Online Marketing Revealed: Behind the scenes stories." The series's first seminar, says Hostway, offered small business operators online marketing advice from experts at C|Net, NetMechanic and Hostway.
?With this first seminar of our series,? said Hostway co-founder John Lee, ?we hoped to help our customers, and other members of the small business community, leverage their company's Internet presence to the highest capacity."
The big news this week, of course, was the positive progress made by several of the world's largest communications carriers, a business that has struggled through most of this year. The settlement of the SEC's civil suit against WorldCom, and Level3's acquisition of Genuity, would seem to indicate that these companies are committed to maintaining or improving their positions in the market. Though it's still too early to make any bold claims, this may be an early step in the righting of the telco space.