Exodus To Restructure After Filing For Bankruptcy - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Exodus To Restructure After Filing For Bankruptcy

The company, which already trimmed more than 500 jobs this quarter, said it will make additional staffing cuts as a result of the restructuring.

Exodus Communications Inc. will reorganize after filing for Chapter 11 bankruptcy on Wednesday. The Web-hosting company, which houses data centers where more than 4,000 companies run their Web sites, is $3.5 billion in debt and quickly draining its cash reserves. The company posted a loss of $538 million in its second quarter ended in June, multiplying losses more than 10 times from the same period a year ago.

Exodus has secured $200 million in financing from GE Capital, which it will use to continue service to customers and fund operating expenses and employee and supplier obligations. The company, which already trimmed more than 500 jobs this quarter, leaving headcount under 3,000, said it will make additional staffing cuts as a result of the restructuring.

One analyst believes bankruptcy filing is a sign that Exodus has found a suitable takeover partner and is ridding itself of debt as part of the deal. "The reason Exodus made the decision now rather than later in the year is that it has found a strategic investor to take over operations," says Joel Yaffe, an analyst at Giga Information Group. "They must have a suitor waiting in the wings, otherwise they would hold out a little longer."

Exodus said in June that it had $617 million on the balance sheet and would end the year with $200 million in the bank, enough to keep operating through the end of the year. The bankruptcy procedures won't help the company solve its dilemma of drumming up new business. Many prospective customers have already been scared away by the company's shaky financial situation and loss of top executives, including former CEO Ellen Hancock earlier this month. However, existing customer--such as Royal Caribbean Cruise Lines, ABN Amro, and Best Buy--should breathe a little easier, says Jaffe, now that Exodus is doing something about its enormous debt.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2021 State of ITOps and SecOps Report
2021 State of ITOps and SecOps Report
This new report from InformationWeek explores what we've learned over the past year, critical trends around ITOps and SecOps, and where leaders are focusing their time and efforts to support a growing digital economy. Download it today!
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

Becoming a Self-Taught Cybersecurity Pro
Jessica Davis, Senior Editor, Enterprise Apps,  6/9/2021
Ancestry's DevOps Strategy to Control Its CI/CD Pipeline
Joao-Pierre S. Ruth, Senior Writer,  6/4/2021
IT Leadership: 10 Ways to Unleash Enterprise Innovation
Lisa Morgan, Freelance Writer,  6/8/2021
Register for InformationWeek Newsletters
Current Issue
Planning Your Digital Transformation Roadmap
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll