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Strategies & Market Trends : Cable and Wireless (CWP) -- Ignore unavailable to you. Want to Upgrade?

To: techreports who wrote (151)	5/14/2002 5:16:47 PM
From: CIMA	Respond to of 162

Question Marks at Cable and Wireless By SUZANNE KAPNER LONDON, May 13 — In the last three years, Graham Wallace, chief executive of Cable and Wireless, has defied critics by transforming a lumbering phone company into a New Age provider of Internet services to large corporations. Now that strategy — and Mr. Wallace's job — is on the line. With Cable and Wireless's stock price floundering, investors are increasingly calling for a shake-up, including the shutdown of some units and the resignation of Mr. Wallace. Yet the first of any resignations is likely to be that of Mr. Wallace's boss, Sir Ralph Robins, people close to Cable and Wireless said. Sir Ralph is expected to resign as chairman, perhaps as soon as Wednesday, when the company reports financial results for the year ended March 31. His departure, however, is likely to be attributed more to age — he will be 70 this year — than to the company's travails. Other boardroom shuffles are a possibility; Robert Lerwill, the finance director, may take a more subordinate role, analysts said. Peter Eustace, a Cable and Wireless spokesman, declined to comment on the possible management changes. He also gave no sign that Cable and Wireless was preparing for a revamping. "We believe that our basic strategy is the right one for long-term value," he said. Investors apparently disagree. Frustrated by Cable and Wireless's worsening fortunes — the company has lowered its financial targets three times in 12 months — they have erased some $9.8 billion in market value the last year. On Monday, the shares closed down 3.75 pence in London, at 199 pence ($2.91). Cable and Wireless is expected to report a 54 percent decline in earnings, before interest, taxes, depreciation and amortization, to £820 million, for the recently completed financial year, according to a consensus of analysts. Revenue is expected to decline 28 percent, to £5.8 billion. Among the problems facing the company is how to stem losses at its Web-host unit, Cable and Wireless Global. Mr. Wallace invested heavily to acquire networks in Japan, the United States and Britain, as did rivals. Too much competition and the slowing economy caused prices to plummet. As a relative newcomer to the field, the backbone of Cable and Wireless's services is still in voice transmission, rather than specialized data services, making the company more vulnerable to the downturn, analysts said. Unlike rivals like Global Crossing and WorldCom, which are struggling with heavy debts, Cable and Wireless is flush with roughly £2.2 billion in cash. Yet rather than throw good money after bad, some analysts said, it should close its Web-host operations in Japan and the United States, where it is too small to compete effectively. Instead, it should focus on Britain, which accounts for 60 percent of the division's revenue. "In Japan and the United States, Cable and Wireless is subscale and disadvantaged compared with the competition," said Paul Moran, an analyst with Credit Suisse First Boston in London. Other issues have bothered investors. A Securities and Exchange Commission investigation into the way Global Crossing and other telecommunications companies account for revenue on capacity they sell to one another has raised eyebrows in London. The Accounting Standards Board, Britain's main accounting rule maker, is looking into the matter, though no formal investigation has begun. Alan Cook, the board's technical director, said it was possible that new rules to take effect next year might prevent telecommunications companies from recognizing such swaps as revenue. The changes would have an impact on Cable and Wireless's revenue, 4.6 percent of which came from swaps in the 2001 financial year. Mr. Eustace, the spokesman, said the company was complying with British accounting rules; if the rules change, he said, it will be obliged to follow the new guidelines. Cable and Wireless's old business, known as Cable and Wireless Regional, which supplies telephone services in Panama and the Caribbean, remains its biggest money maker. That is not a ringing endorsement of Mr. Wallace's vision, said Mr. Moran, the analyst, noting that "if you want to change the strategy, then you change the C.E.O."

To: techreports who wrote (151)	6/13/2002 9:16:06 AM
From: CIMA	Respond to of 162

DBRS Updates Benchmark Report On Cable & Wireless PLC 6/13/02 DOMINION BOND RATING SERVICE LTD. ("DBRS-T") CABLE & WIRELESS PLC ("CWP-BHDNX3") - DBRS Updates Benchmark Report On Cable & Wireless PLC Cable & Wireless plc ("C&W" or "the Company") has seen its financial risk decline substantially, but this has come at the cost of increased business risk over the last two years. During this period, C&W sold its incumbent operations in the U.K., Hong Kong, and Australia, and generated substantial cash proceeds, resulting in a current net cash position of 2.6 billion. C&W's remaining incumbent operations generate strong operating cash flow, contributing 100% of C&W Regional's 2002 EBITDA and remaining free cash flow positive. Going forward, growth in cash flow from this segment is expected to be in the mid-single digits, attributable to mobility and DSL services in the Caribbean, Panama and Macau. However, the Company's shift in strategic focus from traditional incumbent operations towards IP, data, Web-hosting and voice services targeting business customers has negatively impacted overall cash flow from operations. Cash flows from the Global segment have not grown at the rates anticipated, with EBITDA declining to virtually zero in fiscal 2002, attributable to: (1) declining prices for all services due to excess capacity; and (2) decreased demand for data services related to the economic slowdown. Although the Company has reduced capex, free cash flow deficits from the Global segment still exceed 1 billion. Even so, C&W Global's free cash flow deficit will likely be reduced in fiscal 2003, while the revenue outlook remains uncertain. The Company still plans to spend 650 million on capex in this segment, a figure that appears to be exorbitant given that: (1) C&W just wrote off 4 billion in fixed assets and goodwill pertaining to the Global segment; (2) entire networks are being auctioned for less than 650 million (e.g. Global Crossing and KPNQwest); and (3) the Company's focus is suppose to be on on-net sales. Instead of spending on additional network infrastructure, the Company should be focusing on gaining a substantial customer base to fill its existing capacity and possibly complement its existing Regional operations. C&W is likely to be one of the survivors in the alternative carrier industry, but the uncertainty concerning how the industry will rationalize means continued high business risk. Although C&W has a strong balance sheet and not much financial pressure, it is not immune to the operational issues that face the industry. TEL: 416-593-5577 ext.2268 Rory Buchalter EMAIL: rbuchalter@dbrs.com TEL: 416-593-5577 ext.2242 Chris Diceman

To: techreports who wrote (151)	7/31/2002 2:37:53 AM
From: CIMA	Read Replies (1) \| Respond to of 162

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.