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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (62383)	11/10/2002 10:35:35 PM
From: elmatador	Respond to of 77400

C&W planning retreat from data services By Robert Budden and Tim Burt Published: November 10 2002 20:18 \| Last Updated: November 10 2002 20:18 ELMAT'S COMMENTS: Was it not data services that would save every company? Doesn't look like. The CSCO part of the iceberg seems to be the iceberg itself and -like the real icebergs- it is melting away as it travels south. When the board of Cable and Wireless meets on Tuesday, directors of the telecommunications group will be asked to approve a wide-ranging restructuring of its lossmaking international data services division. In all, about 3,000 jobs are likely to be shed at C&W Global, signalling a retrenchment in a business that swallowed billions in the drive to become a world-leading carrier for internet and data traffic. The agenda at Tuesday's board meeting has been drawn up, ostensibly, to sign off C&W's first half results - due to be announced on Wednesday. But the strategic retreat at C&W Global, likely to involve restructuring charges of up to £1bn ($1.55bn) may be regarded by the board as an opportunity for Graham Wallace, chief executive of C&W, to prove he can turn the business round. Mr Wallace is not expected to depart, in spite of his $1bn investment to create C&W Global after the acquisition of Exodus and Digital Island, the US web hosting firms. But he will be held to his firm commitment that the operations will reach free cash flow break-even by March 2004. "The company will know by autumn next year whether it is on track to deliver that break-even, so Graham has 12 months to pull it off," said one analyst. Speaking earlier this year, Mr Wallace claimed the return to positive cash flow could be achieved even on the back of very limited revenue growth. But the continued downturn in the telecoms market is hurting C&W. In September, the telecoms operator issued its fourth profits warning in 18 months. C&W warned first-half revenues at Global would be down 6 per cent, compared to expectations of flat to 10 per cent revenue increases. The declines are being driven by tough competition in the web-hosting and data services markets. According to Band-X, a leading trader of telecoms capacity, the cost of IP traffic has fallen from approximately £400 a megabyte two years ago to £170 today, virtually wiping out all chances of achieving revenue growth. Excluding its web-hosting business, revenues at C&W Global were £3.9bn in 2001; analysts expect sales for the current year to be about £2.7bn. The bleak outlook led the board of C&W to hire consultants from Deloitte & Touche and Mercer to take a close look at Global, and identify those businesses furthest from break-even - and the likely costs of exiting them. A formal decision on what action should be taken will be made by the board on Tuesday and details revealed at the company's results on Wednesday. Given the state of the market, maintaining Global in its current form looks unlikely. "It is difficult to find much evidence of a bounce given the emergence from Chapter 11 of the likes of Global Crossing and WorldCom," says Richard Elliott, co-founder of Band-X. "The overcapacity is going to take some time to work its way out of the system." Indeed many analysts argue C&W will be forced to shut down most or all of its Global operations in the US, leading to hefty job losses. Investec Securities believes that Global's US operations, including its recently-acquired web-hosting businesses, are losing close to £300m a year, eating into the company's £2.2bn cash pile. "It is now clear to management that it faces a long period of continuing losses in the US before there is likely to be any visibility of a turnaround," according to Investec. "We believe this will lead the company to conclude that it has little choice but to withdraw from the US market." The worry is how much it could cost to exit the US. Closing down its US voice business ended up costing the company £200m even though this division generated annual revenues of just £230m, as the company wound up costly capacity contracts and leases. Most expect a full scale US exit to reach almost £1bn but the precise costs are unclear. The review may even force C&W to pull out of web-hosting, reversing Mr Wallace's most recent $750m acquisition of Exodus Communications earlier this year. "But the big unknown is what are the costs of exiting these businesses," says Fraser McLeish, analyst at Investec Securities. "They might uncover the costs and find that it is too costly to shut them down. That would be the real nightmare." Mr Wallace recently indicated that C&W would "only [close down operations] if we can get good pay-back. If you can get the cash back in 12 to 18 months then this is a pretty sensible thing to do." But Mr Wallace is convinced C&W will weather the storm. "We will clearly be a survivor. Our financial strength is quite unusual, particularly in telecoms. Even on the most pessimistic view of cash burn we will be here forever." But the question investors and analysts are asking is how heavily C&W will need to slim down to survive.

To: RetiredNow who wrote (62383)	11/11/2002 11:52:14 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 77400

here's a technology I know I'm waiting for... Major studios to launch Net movie rentals ....$1.99 to $4.95 Pricing and terms are set by individual studios, with rental fees ranging from $1.99 to $4.95. Consumers download a film to their computer hard drive and keep it for up to 30 days. But once they begin to watch the movie, the rental clock starts ticking. They can watch it for 24 hours, then the movie is erased from the hard drive. siliconvalley.com I think most people think the best thing about these video servers is the convenience... but I want it for the variety. Every time Ebert and Roeper recommend a documentary its impossible to find. Even if you wait to rent it there's no guarantee blockbuster will have it. Lizzie