Cable & Wireless Confident, Focused in Market Downturn
thewhir.com
Adam Eisner, theWHIR.com
July 25, 2001 - In the Web hosting business, “edge” is a term typically used to describe part of a network.
British communications firm Cable & Wireless (cw.com), however, appears to be introducing an edge to its attitude as well. Based on several actions by the company in recent weeks, C&W appears to be sending signals to its customers, investors and competitors that it is serious about grabbing a larger share of the Web hosting market.
One of the most recent indicators is the management shuffle the company announced last week. C&W said Simon Cunningham, the current CEO of its Japan/Asia unit, would become CEO of its U.S. business in August. Cunningham will replace Bill Austin, former CFO of Exodus Communications, the well-known bankrupt Web hosting firm that C&W purchased in early 2002. With the company now almost fully integrated in to C&W, Austin’s work is considered to be largely complete.
"Bill led Exodus through its Chapter 11 experience and has now successfully integrated it within C&W," said Don Reed, CEO of C&W Global, in a press release last week. "We thank him for his guidance and active contribution during this process and wish him well for the future."
Austin will be replaced by a person with a great deal of experience and skill in the area of integration, an indicator that the company is determined to use its recent acquisitions as the long-term foundation for its business (aside from Exodus, C&W also acquired Digital Island, a firm specializing in Web hosting and content delivery, in mid-2001 to complete its “holy trinity” of content delivery, bandwidth and Web hosting). Cunningham has held his current position since C&W purchased Japanese international telephone company IDC in 1999.
Aside from diversifying IDC and C&W’s interests from a heavy telephone base in to several facets of data services, Cunningham led the integration of PSINet Japan’s assets in to C&W, which the company purchased in late 2001 for approximately $10 million. He will likely assume similar duties North America, where Exodus and Digital Island are still being worked in to the company’s overall scheme of business.
At the same time of Cunningham’s appointment, the company also said that Phil Green, who is currently Senior Vice President of C&W’s Network and Systems Group in the company’s Global Operations unit, would take Cunningham’s post at C&W Japan/Asia.
Aside from a management shake-up, comments at the company’s Annual General Meeting earlier this month reflected a great deal of confidence from leadership in C&W’s future. CEO Graham Wallace said he expected a “reduction in competitive intensity as the sector shakeout comes towards its end”, and said he hoped for the company to reach a global cash-flow positive level by the fourth quarter of 2003/2004. Wallace also said C&W now had 2500 Web hosting customers, and emphasized that its client base included large corporations focused around three “core market segments” of financial services, media and technology – typically stable customers when compared to dot coms, which much of the industry has relied on previously for revenues.
C&W has already said that its Exodus acquisition has been a pleasant surprise thus far, with the company exceeding revenue expectations because more customers chose to stay with the business than first anticipated – a solid indicator that although Exodus’ financials may have been in trouble, there were no fundamental problems with the company’s operating methodologies.
Analysts also seem pleased with the company's outlook, as an informal lunch with approximately 20 analysts last week helped drive the company's stock up more than five percent, Reuters reported. According to Reuters, a Merrill Lynch research note reported that C&W's new finance director "believed fundamentally in the CW Global business model but was dissatisfied with its current performance," which indicates management feels there is still much work to do.
C&W also appears determined to grab its competition by the horns wherever possible, as it announced last week that it intends to continue Digital Island’s legal battle with Akamai Technologies, a rival content delivery firm. Digital Island and Akamai have battled each other over patent infringement allegations for months, and both sides have tried to claim victory in rulings handed down thus far. The plot thickened last week when Digital Island (now a Cable & Wireless service) accused Akamai of infringing on a patent awarded to C&W on July 2. In what appeared to be fighting words that could eventually lead to a brawl, the company also said it felt the lawsuit was “one aspect of what is expected to be a multi-year effort to protect C&W's intellectual property and defend its status as the first inventor of CDN [Content Delivery Network] technology.”
The company has also been busy taking aim at competitors in Europe recently, as it was reportedly among five major European telcos that wrote to Mario Monti, the European Commissioner for Competition, alleging that former European telcos have been acting in a distinctly anti-competitive fashion.
It's difficult to fault C&W for their seemingly vigilant focus all of a sudden; the firm has spent a great deal of its excess capital on Web hosting assets, and is under a fair amount of pressure to perform well in a market where success isn’t even remotely certain any longer. But as larger communications firms like Global Crossing, WorldCom and KPNQwest fall by the wayside, the opportunity to become the dominant provider of network services is quickly opening up in North America and Europe. Therefore, while a situation like WorldCom’s may cause short-term havoc with financial markets, continued telco troubles can only be good news for C&W’s long-term outlook as long as the company is fiscally healthy.
Based on recent events, Cable & Wireless therefore appears determined to stay put amid the recent market turmoil, and determined to succeed. When the market took a turn for the worse and investors demanded the company take advantage of its strong cash position, Cable & Wireless reacted. And now that following its string of acquisitions it is still armed with a strong cash position, a solid portfolio of services and now a little bit of attitude, the company appears to be poised to solidify itself as a network services leader.
thewhir.com
Cable & Wireless Confident, Focused in Market Downturn
Adam Eisner, theWHIR.com
July 25, 2001 - In the Web hosting business, “edge” is a term typically used to describe part of a network.
British communications firm Cable & Wireless (cw.com), however, appears to be introducing an edge to its attitude as well. Based on several actions by the company in recent weeks, C&W appears to be sending signals to its customers, investors and competitors that it is serious about grabbing a larger share of the Web hosting market.
One of the most recent indicators is the management shuffle the company announced last week. C&W said Simon Cunningham, the current CEO of its Japan/Asia unit, would become CEO of its U.S. business in August. Cunningham will replace Bill Austin, former CFO of Exodus Communications, the well-known bankrupt Web hosting firm that C&W purchased in early 2002. With the company now almost fully integrated in to C&W, Austin’s work is considered to be largely complete.
"Bill led Exodus through its Chapter 11 experience and has now successfully integrated it within C&W," said Don Reed, CEO of C&W Global, in a press release last week. "We thank him for his guidance and active contribution during this process and wish him well for the future."
Austin will be replaced by a person with a great deal of experience and skill in the area of integration, an indicator that the company is determined to use its recent acquisitions as the long-term foundation for its business (aside from Exodus, C&W also acquired Digital Island, a firm specializing in Web hosting and content delivery, in mid-2001 to complete its “holy trinity” of content delivery, bandwidth and Web hosting). Cunningham has held his current position since C&W purchased Japanese international telephone company IDC in 1999.
Aside from diversifying IDC and C&W’s interests from a heavy telephone base in to several facets of data services, Cunningham led the integration of PSINet Japan’s assets in to C&W, which the company purchased in late 2001 for approximately $10 million. He will likely assume similar duties North America, where Exodus and Digital Island are still being worked in to the company’s overall scheme of business.
At the same time of Cunningham’s appointment, the company also said that Phil Green, who is currently Senior Vice President of C&W’s Network and Systems Group in the company’s Global Operations unit, would take Cunningham’s post at C&W Japan/Asia.
Aside from a management shake-up, comments at the company’s Annual General Meeting earlier this month reflected a great deal of confidence from leadership in C&W’s future. CEO Graham Wallace said he expected a “reduction in competitive intensity as the sector shakeout comes towards its end”, and said he hoped for the company to reach a global cash-flow positive level by the fourth quarter of 2003/2004. Wallace also said C&W now had 2500 Web hosting customers, and emphasized that its client base included large corporations focused around three “core market segments” of financial services, media and technology – typically stable customers when compared to dot coms, which much of the industry has relied on previously for revenues.
C&W has already said that its Exodus acquisition has been a pleasant surprise thus far, with the company exceeding revenue expectations because more customers chose to stay with the business than first anticipated – a solid indicator that although Exodus’ financials may have been in trouble, there were no fundamental problems with the company’s operating methodologies.
Analysts also seem pleased with the company's outlook, as an informal lunch with approximately 20 analysts last week helped drive the company's stock up more than five percent, Reuters reported. According to Reuters, a Merrill Lynch research note reported that C&W's new finance director "believed fundamentally in the CW Global business model but was dissatisfied with its current performance," which indicates management feels there is still much work to do.
C&W also appears determined to grab its competition by the horns wherever possible, as it announced last week that it intends to continue Digital Island’s legal battle with Akamai Technologies, a rival content delivery firm. Digital Island and Akamai have battled each other over patent infringement allegations for months, and both sides have tried to claim victory in rulings handed down thus far. The plot thickened last week when Digital Island (now a Cable & Wireless service) accused Akamai of infringing on a patent awarded to C&W on July 2. In what appeared to be fighting words that could eventually lead to a brawl, the company also said it felt the lawsuit was “one aspect of what is expected to be a multi-year effort to protect C&W's intellectual property and defend its status as the first inventor of CDN [Content Delivery Network] technology.”
The company has also been busy taking aim at competitors in Europe recently, as it was reportedly among five major European telcos that wrote to Mario Monti, the European Commissioner for Competition, alleging that former European telcos have been acting in a distinctly anti-competitive fashion.
It's difficult to fault C&W for their seemingly vigilant focus all of a sudden; the firm has spent a great deal of its excess capital on Web hosting assets, and is under a fair amount of pressure to perform well in a market where success isn’t even remotely certain any longer. But as larger communications firms like Global Crossing, WorldCom and KPNQwest fall by the wayside, the opportunity to become the dominant provider of network services is quickly opening up in North America and Europe. Therefore, while a situation like WorldCom’s may cause short-term havoc with financial markets, continued telco troubles can only be good news for C&W’s long-term outlook as long as the company is fiscally healthy.
Based on recent events, Cable & Wireless therefore appears determined to stay put amid the recent market turmoil, and determined to succeed. When the market took a turn for the worse and investors demanded the company take advantage of its strong cash position, Cable & Wireless reacted. And now that following its string of acquisitions it is still armed with a strong cash position, a solid portfolio of services and now a little bit of attitude, the company appears to be poised to solidify itself as a network services leader. |
