RealTime IT News

Exodus, StorageNetworks Kiss and Make Up

Just a little more than a month after managed hosting provider Exodus Communications Inc. filed for Chapter 11 bankruptcy protection, the company and its erstwhile partner, StorageNetworks Inc. , resolved outstanding financial matters and reaffirmed their business relationship.

On Wednesday, Exodus agreed to assume all material contracts between itself and StorageNetworks, including the Joint Marketing and Services Agreement under which StorageNetworks provides its services to customers in Exodus' Internet Data Centers.

Under the reworked agreement, StorageNetworks said that joint customers will continue to receive uninterrupted storage services, and both partners will share the economic benefits of the relationship "on both a historical and going forward basis."

"Both companies are committed to providing our customers with world-class data storage management solutions that address their needs not only today, but as data requirements continue to grow in the future," said Paul Flanagan, chief financial officer of StorageNetworks.

StorageNetworks provides data storage solutions to Exodus customers, from primary data storage to tape backup and restore and business continuity solutions.

Exodus filed for Chapter 11 on Sept. 26, after months of speculation that the company was on its last legs. At the time, the company obtained up to $200 million in debtor-in-possession financing from GE Capital, which it used to keep the lights on and suppliers and employees paid.

The company cut its staff by one-third earlier in the year, followed by the unexpected departure of three of the company's 10 board members. In August, then-CEO Ellen Hancock suggested at the time that Exodus was steeling itself to entertain a takeover bid. The company ousted her early in September in favor of L. William Krause.

Krause said Exodus, which recorded 17 straight quarters of growth until the tech bubble burst, had sacrificed profitability for growth and market share during the boom years, over-expanding into areas in advance of demand. Upon taking charge of the troubled company, Krause promised to address balance sheet issues and restore Exodus to financial stability using the assets it built up during the tech expansion.