Adam Einer, theWHIR.comJune 1, 2001 — It was a less-than-stellar week for markets, thanks largely in part to a profit warning Wednesday from hardware giant Sun Microsystems. Tech stocks were slammed Wednesday after the company cut its earnings forecast and warned that sales would be at least 10 per cent below because of economic weakness in Europe. The announcement followed a report released Tuesday by Goldman Sachs which said Sun might have trouble meeting estimates, which dragged the entire tech sector lower. Shares in Sun have lost about five dollars since last week, and finished the week at $16.63. Telecom component maker Alcatel also cut their earnings forecasts. Markets seemed to bottom out for the week on Wednesday, and spent the next two days posting moderate gains. The Nasdaq recovered 38.95, or 1.85%, to close the week at 2149.44 on Friday. It was also a week of ups-and-downs for a number of hosting companies and telecoms. PRIMUS Telecommunications Group became the latest telecom to increase its presence in Latin America Wednesday when it announced the opening of its newest data center in Sao Paulo, Brazil. The Latin American Web hosting market has become a hot commodity in recent months, with a number of companies scrambling to obtain a piece of what is widely considered to be a relatively untouched marketplace. Hosting and IDC services company OptiGlobe, for example, opened two data centers in Latin America last month – their third in the past five months. Cable & Wireless also unveiled a new data center this week. Cable & Wireless IDC, the Japanese business of the telecommunications group, announced the opening of its new Internet Solutions Center in Tokyo. The facility is Cable & Wireless IDC’s fifth data center in Japan, and comes shortly after the opening of the company’s second Osaka data center in April. Global Web hosting company and ISP PSINet did what most considered to be the inevitable on Friday, filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. Four Canadian subsidiaries also filed for protection. The company said that subsidiaries in Asia, Europe, Latin America and the company’s Metamor consulting business were not involved in the filings. PSINet also announced it was selling its Canadian operations and facilities to Canadian telecom TELUS. The proposed purchase, however, is subject to a number of conditions, including regulatory approval. At the time of the filing for protection, PSINet had total assets of $2.2 billion and total liabilities of $4.3 billion, of which $2.9 billion is bond debt. The company said it expects operations to continue. PSINet has been stuck in a financial downward spiral since last year, when the company spent approximately $2 billion to purchase IT consulting firm Metamor, and a substantial stake in Xpedior, an e-commerce consulting company. Meanwhile, ebusiness network providers Genuity Inc., and managed hosting company Integra announced Friday that they had entered into a binding and exclusive agreement to merge their organizations. With three consecutive sessions trading in negative territory this week, it’s safe to say that the positive run that markets have been experiencing have now taken a turn for the worse. However, a report from the U.S. Labor Department released Friday afternoon said the U.S. jobless rate fell to 4.4 percent in May from 4.5 percent in April, surprising most economists. Maybe the news will help markets in the coming week.
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