Jan 4, 2002 : The webhost industry: week review

📅 January 4, 2002 - The New Year got off to a good start for many tech stocks, as the Nasdaq made some significant gains during the holiday-shortened week.
After a sell-off Monday to end 2001, investors returned on Wednesday ready to buy. The Nasdaq surged past the 2,000 level and continued to rise Thursday, buoyed by some positive news out of the chip and hardware sectors.
Despite the large gains made by tech stocks, however, it was a fairly quiet week for the Web hosting industry. Probably the biggest story of the week was Interland's announcement that the hosting company had put in a bid for selected assets of e.Spire, parent company of hosting firms FloridaNet Inc. and CyberGate Inc.
Interland entered a bid of $21 million for parts of the two companies. CyberGate is the parent firm of Florida-based ValueWeb, which hosts 120,000 domains in 136 countries.
Interland's bid exceeds that of e.Spire Chairman George F. Schmitt, who bid for CyberGate in early December. Should Interland emerge with the winning bid, it would mark the second major acquisition for the company in the past three months. In late October, the company acquired the shared hosting accounts of Web hosting provider Interliant.
The news gave Interland shares a bit of a boost, which began the week below the two-dollar level. Interland was trading at $2.25 Friday morning.
Many other notable hosting companies also made headlines this week, as numerous firms announced new agreements and clients. On Thursday, Digital Island announced it would deliver video news from four North American International Auto Shows to MSN Carview visitors in Europe, the Middle East and Africa. MSN's Carview sites provide auto news and ownership services for up to two million unique users per month.
The good news was a bit of a boost for DI, which learned just before the holidays that it had lost a jury in federal court decided that DI had infringed on an Akamai content delivery patent. DI had counter-sued Akamai, but the jury found that Akamai had not any patents owned by DI.
Telecommunications firm Cable & Wireless, which is the parent company of Digital Island, made strong gains this week and was trading at $15.11 heading in to Friday afternoon.
Level 3 Communications said Wednesday it would provide numerous broadband services for Sony Pictures Digital Entertainment's new Screenblast interactive entertainment platform. Level 3 said Sony purchased multiple services, including center co-location and Internet access.
Shares in Level 3 made strong gains on the news, and were trading at $5.62 late Friday morning. The company's stock has made a dramatic improvement in recent months, as it was trading as low as two dollars in early October.
Managed hosting firm Digex unveiled its new high-speed firewall Wednesday, which the company says provides consistent security infrastructure while simultaneously managing large volumes of business transactions. The offering is built on Nokia's IP740 Internet security appliance and is tightly integrated with Check Point's FireWall-1 software.
Digex parent company WorldCom was also in the news this week, as the global communications firm successfully sold nearly all of its Intermedia Business Internet (IBI) assets to Allegiance Telecom Thursday for an undisclosed sum. WorldCom was ordered by the U.S. Justice Department last year to sell all of Intermedia's Internet-based assets except for Digex, an Intermedia subsidiary, which is now part of WorldCom's hosting portfolio. WorldCom was trading at $14.68 Friday afternoon.
Airplane giant Boeing said Monday it had been granted a license by the Federal Communications Commission that will allow passengers to transmit and receive broadband data in flight. The license is the first of its kind in the broadband satellite services industry, and will enable airlines to offer high-speed Internet access above U.S. territory and waters.
On the downside of things, managed hosting firm Verado said Wednesday it had cut 63 employees at its Colorado and California locations. No further details were given in the company's written statement. Verado's common stock moved to the OTC Bulletin Board in November.
As companies get in to the swing of 2002, keep an eye out for upcoming corporate earnings. They will likely go a long way in dictating what sort of a start the new year will have from an economic standpoint.