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Adam Eisner, theWHIR.com
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October 5, 2001 — Tech stocks had a relatively strong week, thanks largely in part to good news from companies like bellwethers Dell Computer and another Fed cut.
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The Nasdaq enjoyed positive trading sessions three days in a row before faltering Friday after warnings from Sun and AMD.
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But despite an impressive market run, a number of Web hosting companies cut jobs, closed offices and lowered expectations this week.
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On Tuesday, WorldCom said it would lay off 1,000 employees from its European office, representing approximately 10 percent of its European workforce. The company said most of the cuts would come in Britain, where the telco’s operations in Europe are headquartered.
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The company said that many positions within the company had become redundant since the completion of its global network and the full integration of UUNet in to WorldCom, resulting in many of the announced job cuts.
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Shares in WorldCom, which took a heavy hit over the summer, have been steadily gaining ground. WorldCom is off about $1.50 for the week, and was trading at $13.30 Friday afternoon.
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Voice and data firm XO Communications also announced layoffs Thursday in an effort to achieve EBITDA positive status by the first half of 2002. The company said it would trim expenses by cutting approximately 600 employees, or eight percent, of its workforce.
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“We are determined to position XO to survive the current challenges in today’s economy. We deeply regret taking this action given the impact on some of our employees, but we are convinced it can be accomplished without affecting our ability to win customers and meet their telecommunications needs, ” said XO chairman and CEO Dan Akerson.
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Shares in the company, which hit a 52-week low September 27 at 27 cents, were up to 40 cents Friday afternoon.
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Vancouver-based Web hosting firm NetNation Communications said Thursday it would close its London sales offices as of December 1, ending a short-lived venture in to Europe. While the company will still continue to offer services to clients in 130 countries worldwide, NetNation will retain offices in North America only.
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Investors didn’t seem to blink an eye at the news, though, and shares in the company picked up close to 75 cents over the course of the week. NetNation was trading at $2.45 Friday afternoon.
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Despite this week’s rash of layoffs and closures, however, some companies are still considering expansion. Take British communications firm Cable & Wirless, for example. C&W CEO Graham Wallace said in a conference call Thursday the company was taking a good look at some of the assets of now-defunct ISP and hosting firm PSINet. Despite the fact the company’s $340 acquisition of managed hosting firm Digital Island was recently completed, Wallace said there is always room for growth.
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“If there are opportunities to buy assets or business that would accelerate the strategy or save us costs, then obviously we’ll review them,” he said. “We’re actually at the moment at some of the old PSINet assets in both Japan and Panama.”
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Shares in C&W were up three cents to $12.84 Friday afternoon.
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North of the border, global computer firm IBM opened its Calgary, Alberta Tuesday, its third in Canada and 40th worldwide. Many Canadian hosting firms and telcos have been clamoring of late to set up data centers in Western Canada, including IBM, TELUS and WorldCom.
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And finally, AT&T bailed out thousands of consumers across North America Monday when it confirmed that it had signed an agreement to purchase most of Excite@Home’s broadband access business assets. Excite@Home, which filed for Chapter 11, sold its high-speed Internet service to AT&T for $307 million.
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Shares in AT&T gained close to $1.50 by Wednesday on the news, but lost most of its gains by Friday afternoon, trading at $19.05.
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Markets have been coming around since the tragic events of September 11, but are still unpredictable and full of volatility. Hopefully we’ll see a few more positive sessions leading to some stability next week.
About theWHIR.com
Since 2000, The Web Host Industry Review has made a name for itself as the foremost authority of the Web hosting industry providing reliable, insightful and comprehensive news, interviews and resources to the hosting community. TheWHIR is an iNET Interactive property. For more information on iNET Interactive, visit http://www.inetinteractive.com
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