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The British powerhouse bought Web hosting and content distribution company Digital Island for $340 million last week. The acquisition did not squelch industry talk that Cable & Wireless — which owns MCIs Internet backbone and views the U.S. as both a strategic market and an incubator of new Internet services — is on the prowl to buy more companies.
Analysts identified potential acquisition targets such as managed hosters like DataReturn, Genuity and NaviSite; colocation giant Exodus Communications; managed services provider Loudcloud; and teetering Internet services concern PSINet. Sources said Exodus would be the least probable acquisition, given its largely real-estate business model.
Cable & Wireless will likely be careful not to purchase another troubled company such as MCIs backbone unit, which presented business and technical integration challenges.
“Just because weve got a huge amount of cash and a strong balance sheet doesnt mean we have to spend it,” Cable & Wireless CEO Graham Wallace said last month.
Cable & Wireless is expected to look for the same kinds of synergies it got from the Digital Island deal.
“We will be in the unique place [of being able] to leverage the best of both worlds — a global backbone, and our data centers and content distribution footprint,” said Tim Wilson, chief marketing officer at Digital Island, indicating that the company will continue buying bandwidth from other service providers to meet redundancy requirements.