Feb 8, 2002 : The webhost industry: week review

📅 February 8, 2002 - It was another busy week for the hosting industry, although all was pretty quiet on the M&A front. For the first time in a long while, there seemed to be no major mergers, sales, acquisitions or bankruptcies to speak of this week.

The only notable M&A activity this week was between optical ISP Cogent Communications and Allied Riser Communications, a provider of communications services in commercial office buildings. On Monday, Cogent completed its acquisition of Allied Riser. As a result, Allied Riser ceased trading on the Nasdaq while Cogent began trading on the American Stock Exchange.
One other sale of note occurred Tuesday, when network specialist Broadwing Inc. announced a definitive agreement to sell a substantial majority of Cincinnati Bell Directory, its yellow page directory publishing business, for $345 million in cash.
IT outsourcing firm EDS had a big week, making two major announcements regarding both new and existing clients. On Tuesday, the company announced a five-year, $15 million agreement to provide financial IT firm Q4i with a full suite of Web hosting and managed storage services. Under terms of the agreement, EDS will host Q4i's Broker IQ, the company's financial services management system.
And Wednesday, EDS said it had extended its relationship with 7-Eleven Inc. to include a full information technology package of integration, storage and hosting services.
Communications firms BellSouth and Qwest also announced an agreement Wednesday, unveiling a wholesale services agreement. Under the agreement, BellSouth will purchase $350 million of services from Qwest over a four-year period. These services will be added to BellSouth's long distance, data and Internet suite of services.
It was also a busy week north of the border, as numerous Web hosting firms made major announcements. On Wednesday, Vancouver-based managed hosting firm RoundHeaven Communications announced the appointment of Robert Offley as the company's President and CEO. Offley joined the company from PSINet Canada, where he was President and CEO.
RoundHeaven also said it is set to expand its business operations to Toronto in early 2002. "The lack of competitors offering the same high level of managed hosting and disaster recovery solutions elsewhere in Canada provides an opportunity to quickly expand our base of enterprise-level customers with mission-critical managed hosting needs," Offley said. RoundHeaven said it would support its expansion with local offices and data centers.
Also Wednesday, Sprint Canada announced the successful implementation of Hudson's Bay Company's national frame relay network as part of a three-year data contract.
On Tuesday, IBM Canada said that Toronto-based Tucows Inc., a wholesale provider of e-business services and applications, had chosen IBM to host its entire suite of Internet service offerings including Tucows' domain registration service and its software download site.
According to the companies, IBM will oversee the hosting of OpenSRS, Tucows' domain registration hub, which handles an average of 3.5 million domain requests a day from more than 5,000 partners in over 100 countries. IBM will also host Tucows' software libraries. The Tucows download site includes more than 30,000 software titles and receives more than 2.5 million page views per day.
In European news, KPNQwest said Thursday it had signed a contract to build a 12-site IP-VPN solution across six European countries for KLM Royal Dutch Airlines. The network will connect KLM's main headquarter site in Amsterdam to KLM locations in France, Germany, Italy, Spain and the UK.
Meanwhile, KPNQwest subsidiary Ebone said Thursday that ACOnet, the Austrian Academic Computer Network, had upgraded its IP and broadband network with Ebone because of growing user demand, the need to increase network effectiveness and to improve access to other international networks.
With earnings season now underway, keep an eye out for financial statements from the industry's movers and shakers in the coming weeks. Their quarterly results might go a long way in providing an indication as to who might make M&A headlines in the coming months.