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July 19, 2001 — (WEB HOST INDUSTRY REVIEW) — Intensifying the company’s focus on achieving profitability, Micron Electronics, Inc. yesterday announced plans to consolidate of two of the company’s smaller data centers to hone the business model of its Web hosting subsidiary, HostPro Inc.
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CEO Joel Kocher said the facility closures in Moses Lake, Wash. and Boca
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Raton, Fla. are possible because of operating efficiencies the company
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expects to gain from its pending acquisition of Interland, Inc.
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(interland.net) scheduled to be completed in August 2001.
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“As we move full-speed-ahead toward completion of our acquisition of
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Interland, we are continuing to identify substantial synergies and cost
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savings,” Kocher said. “Combining the companies, we will double our volume,
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allowing us to streamline operations and absorb fixed costs over a much
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larger base of customers.”
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Kocher believes the new combined company will become EBITDA positive within
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12 months after the acquisition closes, and free cash flow positive by three
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quarters following that.
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Micron’s current projections indicate that it will launch the newly formed
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company with cash balances of $200 million or more.
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Kocher went on to comment that HostPro’s model is built on the efficiency
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and scalability of the shared hosting and scalable managed services market,
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which he says generates higher profit margins and requires less data center
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space. “This model is substantially different from those of Exodus and
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other enterprise-focused players,” he said. “With virtually no debt to
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service, our actions today will further enhance our business model as our
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competitors stagger under their debt burdens from overbuilding.”
