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Adam Eisner, theWHIR.com
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May 24, 2002 — (WEB HOST INDUSTRY REVIEW) — It was another tough week for telecoms, with a number of companies forced to take tough measures in order to deal with the downturn that continues to plague the sector.
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In the case of KPNQwest, the European network and Web hosting firm was forced to file for protection from its creditors under Dutch moratorium law Thursday.
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The company also said its five-member supervisory board had resigned.
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KPNQwest, a joint venture between US telecom Qwest and Dutch communications firm KPN, has experienced significant deterioration in its cash position because of the shaky alternative telecommunications market. The company operates a fiber optic backbone connecting 60 cities throughout Europe.
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In the United States, Metromedia Fiber Network filed for bankruptcy protection Monday. The company said most of its domestic subsidiaries had also filed for protection. The announcement came a little more than two months after the company warned it may be forced to file for protection if it could not restructure its debt.
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Metromedia, which builds fiber networks in metropolitan areas, ultimately had difficulty dealing with the pressure of a reeling telecommunications sector, debt issues and a slide in customer demand. The company also said its stock had been de-listed from the Nasdaq.
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Meanwhile, WorldCom moved on Tuesday to save a bit of cash by announcing it would eliminate its WorldCom group and MCI group tracking stock structure effective July 12.
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By doing so, the company said it expects to save $284 million annually due to the elimination of the MCI group dividend. The tracking stocks were introduced last June.
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In the wake of all of the bad news surrounding the telecom sector recently, one company that wanted to reassure its investors and employees of its strong financial position was network provider Broadwing Inc.
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On Tuesday, the company sent a letter to its shareholders, customers and employees from Chairman and CEO Rick Ellenberger pointing out that Broadwing’s credit facility and debt covenants are in good standing, and that the company uses an SEC-approved approach to its accounting practices. Ellenberger said that Broadwing has not traditionally responded to misunderstood reports, and does not necessarily plan to do so in the future. “However,” the letter said, “the irrational state of the telecommunications market makes it imperative that we take this opportunity to set the record straight for our shareholders, customers, and employees.”
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The managed hosting sector welcomed a new player this week in portal giant Lycos, which said Monday it would begin offering search, managed hosting, content and community services to enterprise-level clients.
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The company said its target market is current Lycos clients or ones that are similar: typically content-driven Web sites with high traffic levels, dynamic content requirements and community components.
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NaviSite also delved in to managed hosting a little deeper Monday when it introduced a number of modular solutions designed for resale by VARs and system integrators. The entire suite consists of application, availability, intranet and Internet modules.
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Keeping with the managed services theme for a moment LoudCloud said Wednesday it had introduced three new features of its Opsware automation technology, designed to help keep e-businesses safe from common security vulnerabilities. The company said the new security features are designed to minimize the risk of human error or malicious activity and improve vulnerability prevention, detection and response.
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And finally, Sun Microsystems unveiled its much-anticipated improvements to its Solaris operating environment with the release of Solaris 9 Wednesday. The company announced over 300 new feature enhancements in the areas of manageability, security, availability and scalability. One of the biggest improvements is the integration of key pieces of middleware, including its popular application server software. Solaris 9 also includes Sun’s Open Net Environment (Sun ONE), a platform for deploying on-demand services.
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Looking ahead to next week and beyond, there is likely to be more bad news out of the communications sector as telecoms continue to fight to improve their finances. Numerous firms seem to be headed in the same direction of troubled firms like Metromedia and KPNQwest – for some, it seems like it’s only a matter of time.
