Close
  • Latest News
  • Cybersecurity
  • Big Data and Analytics
  • Cloud
  • Mobile
  • Networking
  • Storage
  • Applications
  • IT Management
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Menu
Search
  • Latest News
  • Cybersecurity
  • Big Data and Analytics
  • Cloud
  • Mobile
  • Networking
  • Storage
  • Applications
  • IT Management
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home Latest News

      Analyst: Exodus Bankruptcy Imminent

      By
      eWEEK EDITORS
      -
      September 25, 2001
      Share
      Facebook
      Twitter
      Linkedin

        Exodus Communications could file for Chapter 11 bankruptcy within the next two weeks, an industry analyst suggested in a research report released this morning.

        The analyst, Andrew Schroepfer, president of Tier 1 Research, wrote that Exodus is expected to fire about 1,000 people; shut down or sell off data centers and stop competing for new business in an attempt to continue serving its existing customer base. As a result of a preplanned bankruptcy, bondholders might be able to get as much as 25 cents on the dollar. Exodus shares could continue trading through the proceedings, and even get a boost after the company is cleared of the bond debt.

        “Exodus bondholders have formed a creditors committee, which means since there are so many holders of the bonds, it is much easier for the committee to interact with Exodus and work out an agreement rather than have thousands of people try to communicate their individual opinions,” Schroepfer said.

        The company currently has $340 million in cash reserves, according to Schroepfer. Why file for bankruptcy while there is still money in the bank?

        “I think they lost their momentum in winning new business,” Schroepfer said.

        An Exodus spokesperson did not return calls requesting comments.

        Exodus is seeking debtor-in-possession financing, which would let it pay off 20 cents to 25 cents on the dollar to bondholders, Schroepfer said. The layoffs Tier 1 is forecasting would come on top of a recent round of firings that culminated in the resignation of CEO Ellen Hancock earlier this month. Exoduss latest series of layoffs trimmed its ranks to fewer than 3,000 people. Schroepfer predicted the number could drop even more.

        “Because they are going down below 2,000 employees, there is no way they could support the number of data centers they have out there. They can probably cut from 10 to 15 data centers and not lose more than 15 percent of their revenue base,” he said.

        Exoduss prospects after Chapter 11 could be either continuing independence on a smaller scale — forget being the largest Web hoster in the world — or acquisition. Tier 1 points to Electronic Data Systems as an ideal suitor. Other analysts also say not to rule out Global Crossing, which sells 50 percent of Exoduss bandwidth and owns a 20 percent stake in the company. Interactive Week reported the carrier explored the option of making Exodus its subsidiary earlier this year.

        Analysts tracking Exodus were not surprised by the bankruptcy rumor, which has been circulating since the beginning of the year. In fact, a prepackaged bankruptcy deal aimed at wiping clean the bond debt slate has never been ruled out. But many in the financial analyst community dont think Exodus will seek Chapter 11.

        “We do not currently believe Exodus will go bankrupt,” said Cary Robinson, U.S. Bancorp Piper Jaffrays senior research analyst for communication services. “One thought, they could do a prepackaged bankruptcy/restructuring like what was done by Focal Communications. Focals restructuring reduced their debt burden, added capital to the company from external investors and kept the equity alive.”

        Exoduss next debt payment is on Dec. 15.

        Avatar
        eWEEK EDITORS

        MOST POPULAR ARTICLES

        Android

        Samsung Galaxy XCover Pro: Durability for Tough...

        Chris Preimesberger - December 5, 2020 0
        Have you ever dropped your phone, winced and felt the pain as it hit the sidewalk? Either the screen splintered like a windshield being...
        Read more
        Cloud

        Why Data Security Will Face Even Harsher...

        Chris Preimesberger - December 1, 2020 0
        Who would know more about details of the hacking process than an actual former career hacker? And who wants to understand all they can...
        Read more
        Cybersecurity

        How Veritas Is Shining a Light Into...

        eWEEK EDITORS - September 25, 2020 0
        Protecting data has always been one of the most important tasks in all of IT, yet as more companies become data companies at the...
        Read more
        Big Data and Analytics

        How NVIDIA A100 Station Brings Data Center...

        Zeus Kerravala - November 18, 2020 0
        There’s little debate that graphics processor unit manufacturer NVIDIA is the de facto standard when it comes to providing silicon to power machine learning...
        Read more
        Apple

        Why iPhone 12 Pro Makes Sense for...

        Wayne Rash - November 26, 2020 0
        If you’ve been watching the Apple commercials for the past three weeks, you already know what the company thinks will happen if you buy...
        Read more
        eWeek


        Contact Us | About | Sitemap

        Facebook
        Linkedin
        RSS
        Twitter
        Youtube

        Property of TechnologyAdvice.
        Terms of Service | Privacy Notice | Advertise | California - Do Not Sell My Information

        © 2021 TechnologyAdvice. All Rights Reserved

        Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

        ×