Mar 8, 2002 : The webhost industry: week review

📅 March 8, 2002 - Telecom firms continued to be one of the hosting industry's biggest newsmakers this week, as the future of several companies appear to be in the air while the economic crunch continued.
Much of this week's news surrounded bankrupt carrier Global Crossing and its assets, which are being hotly pursued by at least two companies. Early in the week it was revealed that Gores Technology Group, an acquisition firm that buys the assets of major companies in financial trouble, is planning to bid for Global Crossing.
Not to be outdone, however, buyout firm Platinum Equity said Tuesday it was also considering bidding for Global Crossing. Both Platinum and Gores are owned by members of the Gores family, potentially making the battle for Global Crossing a brother-versus-brother affair.
While those two firms were busy fretting over Global Crossing's assets, the company itself was busy as well. On Tuesday, Global Crossing it had filed a suit against telecom XO Communications because of an access dispute. According to Reuters, XO had entered in to an agreement with Global Crossing to provide long distance access to approximately 120 customers that did not have access to Global Crossing's network. XO allegedly cut access because of payment issues. On Wednesday, however, XO said it would restore service after a bankruptcy court overturned a previous decision to discontinue service to Global Crossing customers.
The financial future of XO is also in the air, with at least one source reporting that the company would file for bankruptcy protection by the end of next week. Industry news site Dotcom Scoop alleges to have obtained internal documents that state the company is planning to file for bankruptcy protection by March 15.
Reuters, which initially reported on Dotcom Scoop's findings, quoted a source Friday as saying while the company was considering Chapter 11, it was not a definite at this point and could possibly be avoided. "The situation is fluid," the source said.
Global Crossing and XO weren't the only carriers making headlines this week, however; Qwest Communications was having problems of its own as well. On Monday, the company said it could be in default if it does not take action to reduce debt, and that it was in talks with lenders to try and prevent that from happening.
Qwest said late last week it could be in default by the end of the second quarter, but has been cutting costs by issuing equity-based securities and selling assets to try and prevent defaulting.
WorldCom, another carrier, also made headlines this week - but its news was slightly more upbeat. On Tuesday, the company said it had Ask Jeeves Inc., owner of popular search portal Ask Jeeves, had selected WorldCom's co-location facilities to host its Internet services.
Keeping with data center news for a moment, regional Web hosting provider ViaWest Internet Services Inc. said Thursday it had reached an agreement to acquire the physical and customer assets of Verado's 23,850 square foot data center in Englewood, Colorado.
Verado filed for Chapter 11 bankruptcy protection in mid-February. At that time, the company said it had sold its Irvine, California data center.
Meanwhile, divine Inc., parent company of managed hosting firm Data Return, announced a significant revenue increase in its quarterly report released late Thursday. The company announced consolidated revenues of $80.5 million for the quarter ended December 31, 2001 - an increase of more than 500 percent over the fourth quarter of 2000.
While much of this week's news surrounded larger, publicly-traded communication firms, a number of smaller companies made announcements as well. On Monday, Superb Internet said it had completely revamped its reseller program in an effort to get SMEs online more quickly. Aside from now offering reseller discounts of up to 50%, the company also unveiled a new Web-based myCP control panel that simplifies the reselling process.
IT outsourcing firm Inflow released some good news Wednesday, announcing an annual growth rate of more than 170 percent for 2001. The company attributed its additional revenue and growth to both new customers and higher penetration of managed services among existing customers.
Inflow landed more than 450 new customers in 2001, bringing its total customer base to more than 700.
And finally, managed services firm Cervalis announced a partnership with professional IT services firm Plural, Inc. Thursday to develop services for Microsoft platforms. Through the partnership, Cervalis' clients will have access to Plural's Microsoft consulting, Web and application development and Web services, while Plural customers will have access to Cervalis' IT and Internet infrastructure management services.
Telecom firms will likely be the biggest newsmakers over the next week, as there is much to be settled at Global Crossing, XO, Qwest and most other similar firms. The industry has had a difficult time over the past few months, and, much like the hosting sector, consolidation is likely the next step.