dcsimg
RealTime IT News

Exodus Preps For a Buyer or an Angel

Exodus Communications Monday says it is still looking for a buyer or a angel investor to save its bankrupt business.

But management at the Santa Clara, Calif.-based company is issuing a caveat: regardless of the outcome of these discussions, it is likely that the company's common stock will have no value.

"We are weighing all of our options at this time and nothing has been determined at this point," says Exodus spokesperson Maureen O'Connell. "Right now it's up to the board to determine which path it wants to take.

The company also says it has stopped development on ten data centers that were under construction at various locations around the world.

The question now is who would be interested in buying Exodus' damaged goods?

"If anyone might be interested in buying Exodus at this point, it would be the Telcos like AT&T or Sprint," says Raymond James & Associates analyst Jonathan Ruykhaver. My understanding is that their oldest IDCs (Internet data centers) would be an attractive commodity. They're not entirely on shallow ground but unless they've figured out a way to reduce their spending it sounds like their just trying to drum up interest in the company.

One thing in Exodus' favor is that it seems to have settled its financial differences with StorageNetworks Inc. (NASDAQ:STOR) and reaffirmed their business relationship.

Exodus, which hosts, manages and services other companies' Web sites, 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.

The company reported 17 straight quarters of growth until the bubble burst. During its quarterly earnings reporting in July, Exodus reported a loss of $583.4 million, or $1.05 a share, compared with a loss of $51.8 million, or 13 cents a share, a year ago.

Ever since then, the company's stock has been trading on the over-the-counter markets well under $1 per share.