Mar 15, 2002 : The webhost industry: week review

📅 March 15, 2002 - Infrastructure firms continued to be in the spotlight this week, as many companies attempted to deal with financial difficulties and investigations.
On Monday, both Qwest Communications and WorldCom said they had received requests from the Securities and Exchange Commission (SEC) for the voluntary production of information.
The SEC will look at thee aspects related to Qwest's accounting practices in 2000 and 2001: the sale of capacity assets, the sale of equipment and the finances of Qwest Dex, the company's information directory.
WorldCom said the SEC's request addressed a number of areas, including the integration of WorldCom and MCI's computer systems and loans by WorldCom to officers or directors. The notices are not an indication of any wrongdoing by either company.
Infrastructure provider Global Crossing, already the subject of investigations by both the FBI and SEC, said Monday it intends to resist liquidation by strengthening its budget. John Legere, CEO of the bankrupt company since October, has eliminated its corporate airplanes and posh office space, including its location in Beverly Hills, and will continue tighten expenditures. On Wednesday, The House Energy and Commerce Committee asked Global Crossing to turn over a number of financial records and internal documents by March 26.
Meanwhile, troubled telecom XO Communications said Monday it had rejected a takeover proposal from bondholders led by financier Carl Icahn. XO said it plans to implement a previous proposal from buyout firm Forstmann Little & Co. and partner Telefonos de Mexico as originally planned.
Two companies with big hosting divisions got some good news this week when they announced additional funding agreements. On Monday, Web hosting firm and ASP Interliant said it had secured a $10 million funding deal with its two largest investors, Charterhouse Group International Inc. and Mobius Venture Capital. And on Thursday, global network services provider SAVVIS Communications Corp. said it had signed an agreement for equity funding of approximately $158 million. SAVVIS said the funding would be used to reduce debt and other liabilities, and would provide additional working capital to bolster the company's customer base.
In Europe, communications firm KPNQwest and Pan-European hosting company Host Europe announced a major alliance Thursday. The two companies signed an infrastructure partnership agreement that will see Host Europe move its current Cologne-based offices and data center infrastructure into KPNQwest's EuroRing facility in Cologne. Host Europe also plans to move its German staff into the building, and will brand it a Host Europe office.
Back in the U.S., communications firm AT&T Broadband and EarthLink, a major ISP, have inked a deal that will allow EarthLink to offer high-speed cable Internet service via AT&T Broadband's network. EarthLink will initially the service in Boston and Seattle, and plan on offering it in additional cities by 2003.
European data services firm Cable & Wireless and hardware giant Sun Microsystems also announced a strategic alliance in the U.S. this week, forging an agreement Wednesday to develop solutions for three vertical markets: financial services, retail, and entertainment and media. C&W will develop and market the services under its newly-acquired Exodus Communications brand. Under the agreement, Exodus will also become a Sun preferred service provider.
And north of the border, Toronto-based co-location firm Q9 Networks said Monday it had been chosen by online investment firm Morningstar Canada to provide hosting services for all of its Web properties, including its Morningstar.ca and MorningstarAdvisor.ca sites, its Morningstar Advisor Workstation Tool and additional staging, testing and database platforms.
As investors, analysts and government officials continue to keep a close eye on struggling infrastructure firms over the next few weeks, here's a bit of news to consider: according to research firm TeleGeography, there is hope for the bandwidth industry. Demand for capacity is robust and growing, and those companies that can hold on will ultimately prevail.