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Exodus Communications Expects Profit in 2000: Bloomberg Forum
New York, June 21 (Bloomberg) -- Exodus Communications Inc., one of the biggest managers of Internet data centers, is on track to turn profitable by early 2000 because of increased volume, said Chief Executive Ellen M. Hancock.
''We are showing improvement in financial performance every single quarter,'' she told the Bloomberg Forum.
Seven of the Santa Clara, California-based company's 10 centers are profitable already, Hancock said. Another three will open by the end of July. Those centers, which have contracts to run so-called intranets, or corporate computer networks, for companies like Microsoft Corp., eBay Inc. and Lycos Inc., now contain more than 10,000 servers from suppliers like Sun Microsystems Inc. and routers from Cisco Systems Inc.
The customers buy the computers and routers, and Exodus gets paid for managing the flow of data. As the centers ''fill up,'' they ''throw off cash'' and become profitable, Hancock said.
Exodus reported its first-quarter loss widened to $22.2 million, or $1.09 a share, from $13.3 million, or 96 cents, a year earlier. Revenue quadrupled to $30 million from $7.1 million.
Analysts expect the company to lose 52 cents in the second quarter and 47 cents in the third quarter, according to average estimates carried by First Call Corp.
Hancock wouldn't directly comment on the estimates, though she said she was confident Exodus would report positive cash flow ''in the first quarter'' of next year.
Because most of the data Exodus carries flows over internal networks that run faster than the Internet familiar to most computer users, ''we are able to bring some performance to the industry,'' the CEO said.
That's what attracted her to Exodus, she said. Hancock, 56, spent most of her career at International Business Machines Corp., where she was the top networking executive, followed by shorter stints at National Semiconductor Corp. and Apple Computer Inc.
Bigger Rivals
Exodus is beating rivals like AT&T Co., the top telecommunications company, and MCI WorldCom Inc., the second- largest, by winning Internet management contracts from more than 1,000 corporate accounts, Hancock said.
''It's not just space. It's not just bandwidth. It's really a partnership with the company,'' the CEO said.
Exodus plans to use $75 million it raised last week selling 11 1/4 percent notes due in 2008 to expand its centers, Hancock said.
By July 31, the company expects to complete its $100 million acquisition of Cohesive Technology Solutions Inc., she said. The purchase will strengthen customer ties, since Microsoft uses Exodus and Cohesive to host its HotMail free electronic-mail service.
Jun/21/1999 14:54
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(C) Copyright 1999 Bloomberg L.P. |
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