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Adam Eisner, theWHIR.com
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December 7, 2001 — (WEB HOST INDUSTRY REVIEW) — North American markets had a fairly strong week, with the Nasdaq surging above the illustrious 2,000 mark for the first time since early August on Wednesday and the Dow above 10,000 for the first time in three months.
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The rallies had a mixed effect on hosting and communication firms, many of whom had major announcements this week.
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On Friday, communications firm Level 3 said it had reached an agreement to buy the wholesale dial-up Internet access business of McLeodUSA Inc., an integrated communications company.
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Under the agreement, Level 3 will pay $55 million and cash and assume certain liabilities in exchange for customer contracts, approximately 350 across the U.S., related facilities, equipment and underlying circuits.
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The purchase allows Level 3 to offer dial-up Internet access in all 50 U.S. states, up from its previous total of 37.
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Earlier in the week, Level 3 said it would expand its European network and begin offering carrier services in eight additional markets across Western Europe in 2002.
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Shares in Level 3 had a strong week light of the announcements, picking up a little over a dollar to head in to Friday’s trading session valued at $6.38.
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On Thursday, metro and regional broadband firm Time Warner Telecom announced an agreement to provide fiber optics services to Digital River, an e-commerce outsource provider. Under terms of the two-year agreement, Digital River’s data center will use 155 Mb of Internet access through a Time Warner OC-3 fiber loop. Time Warner is combining the OC-3 network with a Dense Wave Division Multiplexing solution that will allow Digital River to increase capacity on its fiber connection and use it more efficiently.
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The announcement helped shares in Time Warner Telecom gain a whopping four dollars since Monday. TWT was trading at $18.11 Friday morning.
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Managed hosting firm Digex said Wednesday it that Tier 1 Research had named the company the overall leader in Service Level Agreement performance in a Dec. 4 report titled “How Good is Good Enough?” The company credited its recent affiliation with telco WorldCom and subsequent access to a global, redundant network as a strong contributing factor to the award.
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Shares in Digex had a strong week and cracked the three dollar mark. Digex was trading at $3.06 heading in to Friday afternoon.
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eBay, one of the Internet’s largest auction and trading sites, said Tuesday it would use Sprint’s managed hosting services for its back-up systems. This will allow the company to have a back-up site located outside of the Santa Clara Valley. And on Wednesday, the company said it would provide telecom Metromedia Fiber Network (MFN) with access to fiber optic cable in several cities.
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Investors didn’t seem to react much to the announcements -shares in the company lost about $1.50 during the week, and were trading at $20.44 Friday morning.
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Two companies made significant announcements early in the week regarding their European operations. Private hosting firm Dialtone Internet said Tuesday it would open a data center in the United Kingdom. The new data center, located in West London, will be used to expand Dialtone’s European customer base. The company already has data centers in Mexico and Florida.
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Meanwhile, European managed hosting firm Worldport Communications said Monday it would close its flagship Dublin data center, affecting approximately 85 employees.
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“We must make a fundamental change in the business structure to focus our efforts on the most significant near-term market opportunities and align expenses with a more conservative plan for growth,” said Kathleen Cote, the company’s CEO. “Market growth rates, economic and industry conditions will dictate expansion in the future.”
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Although the Nasdaq and Dow had a very strong and promising week, it will be interesting to see if they can hold on to their gains. If recent months have taught us anything about market activity, particularly when it comes to tech stocks, it’s that anything can happen.
