Aug, 2001 : Exodus Retirements Prompts Doubts Over Company Future
📅 - After announcing the retirement of three board of directorsmembers earlier this week, analysts are once again speculating about thefuture of the once-mighty hosting giant Exodus Communications.
Although a press release Tuesday attributed the retirements to personalreasons, a USA Today article said the parting was the result of internalconflict over the company's future. Although the company says it has $600million in cash, which will allow it to sustain operation through to thethird quarter of 2002, Exodus has managed to pile up a debt of about $3billion. In the last year, the company has also seen multiple rounds oflayoffs and a 98 percent drop in its stock price.
These financial woes, coupled with the company's internal strife, haveprompted Exodus CEO Ellen Hancock to consider a takeover bid.
"We do like the business that we're in and we believe that we havesufficient cash to run it," Hancock told USA Today on Thursday. However,she added that "in today's environment, if a company did come forward withan attractive offer, the burden would be on us and our board to look closelyat it." Hancock made a similar statement in a Network World interviewearlier this month, although she stressed the company's desire to remainindependent.
Considering Exodus' debt, and the current industry-wide dot-com melt down,some analysts doubt that many buyers would be enthusiastic to acquire thestruggling company. The firm has already imposed several cost-cuttingmeasures, including a reduction in capital expenditures from $1.2 billion to$900 million for the year. Hancock said her company is considering raisingfunds through sales leaseback of equipment and selling some administrativefacilities.
Shares of Exodus closed down 3 cents on Thursday, to $1.18.
Although a press release Tuesday attributed the retirements to personalreasons, a USA Today article said the parting was the result of internalconflict over the company's future. Although the company says it has $600million in cash, which will allow it to sustain operation through to thethird quarter of 2002, Exodus has managed to pile up a debt of about $3billion. In the last year, the company has also seen multiple rounds oflayoffs and a 98 percent drop in its stock price.
These financial woes, coupled with the company's internal strife, haveprompted Exodus CEO Ellen Hancock to consider a takeover bid.
"We do like the business that we're in and we believe that we havesufficient cash to run it," Hancock told USA Today on Thursday. However,she added that "in today's environment, if a company did come forward withan attractive offer, the burden would be on us and our board to look closelyat it." Hancock made a similar statement in a Network World interviewearlier this month, although she stressed the company's desire to remainindependent.
Considering Exodus' debt, and the current industry-wide dot-com melt down,some analysts doubt that many buyers would be enthusiastic to acquire thestruggling company. The firm has already imposed several cost-cuttingmeasures, including a reduction in capital expenditures from $1.2 billion to$900 million for the year. Hancock said her company is considering raisingfunds through sales leaseback of equipment and selling some administrativefacilities.
Shares of Exodus closed down 3 cents on Thursday, to $1.18.
Reads: 1476 | Category: General | Source: TheWHIR : Web Host Industry Reviews
URL source: http://www.thewhir.com/marketwatch/exodus824.cfm
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