DJ Customers Mull Options In Wake Of Exodus Bankruptcy>EXDS
Dow Jones News Service ~ September 28, 2001 ~ 11:38 am EST
By Peter Loftus and Ross Snel
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Some customers of Exodus Communications Inc. (EXDS) say they'll explore doing business with other Web-hosting companies in the wake of Exodus' bankruptcy filing this week.
Others, however, say they'll continue to do business with Exodus, whose heavy debt load and dwindling cash reserves led to the Chapter 11 bankruptcy filing Wednesday.
Exodus, meanwhile, is reaching out to assure customers their service won't be interrupted. So far it's not aware of any substantial customer defections, spokeswoman Maureen O'Connell said.
"There should be no effect on customers throughout this," she said.
Exodus operates Internet data centers housing computer servers that run Web sites. The company serves more than 4,000 customers, including Yahoo Inc. (YHOO) and eBay Inc. (EBAY).
In conjunction with its bankruptcy filing, Exodus received a commitment for up to $200 million in debtor-in-possession financing from General Electric Co.'s ( GE) GE Capital unit. Exodus said the financing will allow it to continue operations during court proceedings.
One of Exodus's most pressing tasks is to hold on to its customers. MSNBC.com, an Exodus customer and one of the more popular news Web sites, said it was considering moving business away from Exodus.
"We were aware there were some issues with Exodus," said a spokesman for MSNBC.com, which is owned by Microsoft Corp. (MSFT) and General Electric's NBC unit. "So there were contingency plans. We'll continue to work with Exodus, but we do have other vendors in place. We may explore using them more."
Business.com, a business information Web site, plans to maintain its existing relationship with Exodus, said spokeswoman Rebecca Anderson. But "as with any service provider, we're exploring options about other providers."
Several Exodus customers expressed their support for the company. EBay and Yahoo said they'll continue to work with Exodus as the bankruptcy case proceeds. Still, they also have contingency plans in place should Exodus have to close some facilities.
Yahoo, the Sunnyvale, Calif., Web portal, said the bankruptcy filing wouldn't affect its service.
"We have been in close contact with Exodus, and we don't anticipate Exodus's filing for bankruptcy will have any immediate or significant impact on Yahoo's services," spokeswoman Shannon Stubo said in a prepared statement. "We understand (Wednesday's) events are a positive step for Exodus and we remain a partner of theirs."
EBay said it has long had contingency plans in place in case one of its server facilities goes down. The San Jose online auction company uses two data centers, one operated by Exodus, the other by AboveNet Communications Inc., a unit of Metromedia Fiber Network Inc. (MFNX), according to eBay spokesman Kevin Pursglove.
EBay's servers are split "fairly" evenly between the two facilities, Pursglove said.
"Our concern about having multiple facilities is based on the mission-critical aspect of our business," Pursglove said.
Even before there were questions about Exodus' finances, eBay had been working closely with both Exodus and AboveNet to ensure the smooth transfer of operations to one facility should the other stop operating, Pursglove added.
The initial motivation stemmed from concerns about natural disasters such as fires or floods, Pursglove said. And because eBay's headquarters are fairly close to the two Web facilities, eBay has been looking for a third, more-distant facility for some time.
EBay plans to continue operating out of Exodus' facilities.
Priceline.com Inc. (PCLN), the Stamford, Conn., online travel company, has similar backup plans. From its inception, it has relied on two Web-hosting companies, AT&T Corp. (T) and Exodus.
"We're covered if something goes down," said Priceline spokesman Brian Ek.
Terra Lycos SA (TRLY), the Spain-based Web portal, uses Exodus for about 80% of its Web-hosting needs, said Chief Information Officer Tim Wright. He sees no "immediate threat" to any Terra Lycos services. The portal will continue to use Exodus, and Wright says its level of service is still top-notch.
Wright says he has spoken to Exodus's new chairman and chief executive, L. William Krause, quite frequently in recent weeks. Wright believes Exodus will emerge from bankruptcy protection "a stronger company."
"The most encouraging piece of what I saw out of this is GE Capital is in on it," Wright said. "There's no way GE Capital gets into this unless they had confidence about the safety of their investment."
Exodus is trying to make sure all of its customers feel as confident as Terra Lycos seems to be. The company held a conference call with customers Thursday morning. Its sales representatives have been furiously calling top customers, and the company has posted details about its bankruptcy filing on its Web site.
But Exodus competitors see an opportunity. One rival, Genuity Inc. (GENU) is aggressively trying to woo away Exodus customers, said Joel Whitman, vice president of Internet strategy.
-Peter Loftus, Dow Jones Newswires; 201-938-5267; peter.loftus@dowjones.com
-Ross Snel, Dow Jones Newswires; 201-938-5285; ross.snel@dowjones.com
(END) DOW JONES NEWS 09-28-01
11:38 AM |
