Will Exodus Sale Follow CEO Exit?

 
 
By eweek  |  Posted 2001-09-10 Email Print this article Print
 
 
 
 
 
 
 

The resignation of CEO Ellen Hancock is a sign that more turmoil is ahead for Exodus Communications and its customers. But will it be good news or bad?

The resignation of CEO Ellen Hancock is a sign that more turmoil is ahead for Exodus Communications and its customers. But will it be good news or bad?

The worlds largest Web hoster announced on Sept. 4 that William Krause, Exodus board member and former 3Com chairman, has replaced Hancock. Some analysts interpreted the departure, coupled with the resignation of three board members in late August, as a sure sign of a forthcoming sale. Others worry that the news is another indication that Exodus is in serious trouble.

"Its not good news. This continues the exodus of employees, board members, management — its all an indication there are significant debates going on the board level over the future of the company," said Cary Robinson, a U.S. Bancorp Piper Jaffray senior research analyst.

Hancock could have been forced to resign not just because she opposed selling Exodus, but because she failed to raise the $300 million to $500 million the company needs to reach profitability, or because she may have grossly overestimated sales to enterprise customers, Robinson said. If Exodus is on track with rising enterprise sales and dot-com churn is contained, he asked, why sell the company for next to nothing?

Andrew Schroepfer, president of Tier 1 Research, said Exodus may sell and lease back some of its data center equipment to raise the $500 million. "High level, I think it [Hancocks resignation] was expected and hoped for," he said. "It signals that they either have the financing really close or sale of the company is really close, and Id say it is more likely the first rather than the second."

Robinson said Global Crossing is the only reasonable acquisition candidate, since Exodus buys more than 50 percent of its bandwidth from that company — a contract any other telecom bidder would have to buy out.

 
 
 
 
 
 
 
 
 
 
 

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