Sep 28, 2001 : Public Web Hosts - The Week in Review

📅 September 28, 2001 - It was a jittery week for investors, with market indexes veering wildly up and down for most of the week.
Economic uncertainty in the wake of the events of September 11th prevented indexes from developing any consistency.
The Nasdaq was up 1.53% at 1482.99 early Friday.
The biggest story out of the Web hosting sector this week was the bankruptcy of hosting firm Exodus Communications, which mercifully filed for Chapter 11 protection Wednesday after months of well-publicized financial troubles.
The company also said it had secured up to $200 million in debtor-in-possession financing from GE Capital to fund operations.
Exodus shares plummeted from an all-time high of more than $80 in early 2000 to less than twenty cents this week in the wake of the dot-com crash. Many of the firms to scale back their offerings or go bankrupt during recent market turbulence were Exodus customers.
William Krause, who took over as CEO earlier this month, said the company's problems were a case of growing too large too quickly. "We sacrificed profitability in exchange for growth and market share, over-expanding in some areas in advance of demand, not anticipating the decline as the dot-com bubble burst and the economy weakened,'' he said in a statement.
The Nasdaq has halted trading in shares of Exodus until a request for further information has been satisfied. Shares in exodus were valued at 17 cents when trading was stopped.
In other bankruptcy news, WorldCom said late Tuesday that it had received approval from the U.S. Bankruptcy Court to acquire they key assets of DSL provider Rhythms.
Rhythms filed for Chapter 11 protection in August, citing a "significant downturn" in the telecommunications sector. The company was slated to shut down operations at midnight Monday, until WorldCom stepped in.
Under the agreement, WorldCom will pay $40 million for a portion Rhythms' assets, including up to $32 million of debtor-in- possession (DIP) financing to continue the operations of Rhythms' network.
Shares in WorldCom initially dropped on the news, but have since recovered and were trading at $15.16 in Friday's market action.
Contrary to most of the headlines emerging from the hosting sector, however, not all of the news was doom and gloom. Qwest Communications International and IT systems provider Perot Systems Corporation said Thursday they had signed a strategic alliance agreement. Under the agreement, which the companies said was valued at approximately $20 million, the two companies will combine Qwest's network and 16 north American IDCs with Perot Systems' integration, application maintenance and technology infrastructure. This combination will then be offered to clients of Perot Systems.
On Tuesday, managed hosting company FASTNET Corporation said it had signed a multi-year agreement with ColoSpace, Inc. to manage and fully occupy its Manchester, NH Co-location Facility.
Shares in FASTNET have made a bit of a recovery since dipping below the dollar level earlier this month, and were trading at $1.09 Friday.
Also on Tuesday, Web hosting firm Inflow rolled out its enhanced suite of Application and Infrastructure Management Services on the heels of securing an additional $35 million in equity funding. The company is teaming with MSP SiteLite, Inc. to provide the services.
And on Monday, hosting and communications firm Hostcentric announced the appointment of Greg McKown as CEO, succeeding Fred Pounds who will step down in light of the company's "refocused market strategy." McKown was previously Hostcentric's president and COO. The company also said it would promote James Shaver, co-founder and president of Hostcentric's Virtual Hosting Group, to COO.
Heading in to next week, don't look for much consistency as investors continue to worry about the nervous economy and cloudy outlook. It could be quite a while before things are back to normal.