Mar 1, 2002 : The webhost industry: week review

📅 March 1, 2002 - Industry dealmakers seemed to be out in full force this week, with several companies announcing key agreements and alliances.
The M&A side of things were fairly quiet but also very steady this week. Perhaps the noisiest announcement of the week was that ISP and hosting firm XO Communications said Thursday it had completed the sale of its European ISP business.
Terms of the deal were not disclosed, although XO did say it took a $320.1 million charge in the fourth quarter to reflect the cost of exiting the business.
Also on Thursday, managed services firm Loudcloud announced that it had signed an agreement to acquire Frontera Corporation, a privately held managed services provider located in Los Angeles. The company said it would acquire Frontera in an all-stock transaction, and that it was still subject to a number of closing conditions. Frontera's customers include Pioneer Electronics, Conseco, Wherehouse Music and Coach, Inc.
There was also one company of note teetering on the brink of bankruptcy this week: fiber optic firm Williams Communications Group. Following the lead of several other providers that have experienced financial trouble in recent months, the company said Monday it may reorganize under Chapter 11 bankruptcy protection in order to restructure its balance sheet and reduce its $975 million debt.
The restructuring would probably mean cutting jobs by 25 percent, as part of cutting its "controllable" cost structure by a quarter, the Tulsa, Okla.-based company said.
Meanwhile, the saga of defunct ISP and hosting firm PSINet continued this week. Optical ISP Cogent Communications announced Wednesday that it had entered in to an agreement to purchase the major U.S. operating assets of PSINet. The purchase, which is subject to bankruptcy court approval, would give Cogent "portions of [PSINet's] U.S. customer base and network, certain equipment, and three hosting centers," a release from Cogent said. PSINet and many of its subsidiaries originally filed for bankruptcy protection in June 2001.
While some companies were shopping this week, others were forging alliances. Telco giant WorldCom and hardware specialists Compaq, for example, announced on Tuesday that the two companies had formed a Web hosting alliance. Under the agreement, WorldCom and Compaq will team on sales opportunities to provide customers with hosting technologies and solutions.
The alliance will mainly gun for enterprise customers, and will provide them with pre-configured Compaq ProLiant server and StorageWorks hosting solutions, pre-packaged software bundles, and consulting and customer support from Compaq. On the communications side, WorldCom will provide managed Web hosting and co-location services through its IDCs.
On the software side, hosting automation firm Sphera said Tuesday that its flagship product, HostingDirector, was now available in an enhanced version for the Microsoft Windows 2000 Operating System.
In order to build an enhanced Windows 2000 version of its product, which is also available for Linux and Solaris, Sphera also forged an alliance: it tapped its long-standing relationship with software giant Microsoft to develop the product. HostingDirector is an automation platform that allows Web hosting companies to cut costs and resources by providing services to users through a graphic user interface.
Several companies announced new clients this week, including AT&T, who recently divested itself of much of its lower-end hosting clientele. On Wednesday, the company said it had been chosen by HyperFeed Technologies, a financial market data provider, to provide managed hosting services.
On Thursday, Rackspace Managed Hosting said it had been chosen to provide hosting to Crimereports.com, a project currently in use by multiple police departments nationwide to improve communication with members of the public. Although founded in 1999, Crimereports.com was expanded to involve citizens in protecting their communities in the wake of the terrorist attacks of Sept. 11.
And across the ocean, European communications firm KPNQwest, now the parent company of Pan-European firm Ebone, announced Wednesday that it had signed a deal to provide video streaming for the Internet operations of German broadcasting giant RTL Group PLC.
An extremely busy February has now come and gone, and spring is quickly approaching. Much like 2001, it would appear that many companies in the tech and communication sectors are not out of the financial woodwork yet; however, once the dust settles, perhaps the hosting industry will have a more defined shape and outlook.