Solution Providers Weigh Options As Exodus' Fate Unfolds

Solution providers are mulling over their relationships with Exodus Communications in light of Cable & Wireless' plan to acquire the bulk of the hosting provider's business and some of its assets.

It's now a waiting game to see which of Exodus' data centers will remain open.

LONG JOURNEY FOR EXODUS • March 2000: Stock hits $89.81 on Nasdaq  • January 2001: Acquires GlobalCenter  • May 2001: Lays off 675  • July 2001: Reports 2Q loss of $583.4 million  • August 2001: Stock price drops below $1  • September 2001: Chairman and CEO Ellen Hancock resigns * Stock trading halted at 17 cents * Files for Chapter 11 bankruptcy protection  • October 2001: Voluntar-ily delists from Nasdaq  • November 2001: C&W agrees to buy chunk of assets for $850 million

"Customers are asking us to look into other tier-one [hosting providers] just because of these concerns," said Gene Wahnefried, CEO of BayMountain, an MSP in Richmond, Va.

In a deal valued at around $850 million, Cable & Wireless, London, plans to buy 26 of Exodus' 44 operational and four other non-operational data centers but has yet to detail which facilities.

"You don't want to make the recommendation to customers if it's a little bit [uncertain] because it's so expensive to move," said Christa Guerrieri, managing partner at Sage Logix, a systems integrator in Greenwood Village, Colo.

For other partners, the naming of Cable & Wireless as Exodus' likely buyer came as a relief.

"Everyone's fears are assuaged by the fact that now you've got two big brand names as your hosting provider," said James Segil, president and COO of KnowledgeBase Solutions, Los Angeles. The company's ASP solution is housed at an Exodus facility.

As part of the deal, Cable & Wireless will acquire Exodus' U.S., Japanese and European customers; its intellectual property and brand name; and about 2,000 of its 3,000 employees, a Cable & Wireless spokesman said.

The deal is expected to close in February after a court-supervised auction of Exodus' assets, during which other potential buyers can place bids.