Webhosting News

As Verizon's ally Genuity and Digex (which will be owned by WorldCom when the Intermedia merger is complete) reported results, Interliant announced an enhancement to its reseller program aimed at small- and medium-sized businesses.

by InternetNews.com Staff [February 8, 2002]

Genuity recorded a fourth-quarter charge of $2.7 billion to write down network assets, canceled contracts, and severance pay and benefits for laid off workers.

The Woburn, Mass., firm also said it is exiting the wholesale dialup business, with the exception of its two largest customers AOL and Verizon. Remaining dialup customers will be transferred to outsourcers.

Verizon no longer owns Genuity (Genuity was spun out of GTE, and Verizon was formed by the merger of Bell Atlantic and GTE, so Genuity was owned by Verizon's GTE subsidiary). According to Verizon's last quarterly report, its GTE subsidiary still owns 100 percent of Genuity's Class B stock, which controls 8.2 percent of the voting rights but no financial equity. On the other hand, Genuity's President came from Bell Atlantic while its CEO, two Senior Vice Presidents, and the Executive Vice President came from GTE.

"Over the past 12 months, we have taken aggressive steps to re-engineer Genuity to successfully navigate through this dramatically changed marketplace," said Paul R. Gudonis, chairman and CEO.

For the fourth quarter, Genuity posted revenues of $316 million, up 5 percent for the previous quarter and reported its first quarter of positive gross margin. Pro forma loss per share, excluding the charge, was 30 cents for the three-month period. That's a penny better than analysts expected.

Revenues for the current quarter are expected to be between $280 million and $290 million due to the exit from the wholesale dial access business and a sluggish economy. The figures were also affected by renegotiated deals with AOL and Verizon, which provide some stability through 2003.

Fourth quarter dialup access revenues increased 1 percent from the previous quarter, but decreased 11 percent or $16 million from the prior year. The drop reflects the company's earlier decision to de-emphasize and now exit the wholesale dial access business.

The company operates the second-largest dialup Internet network in the United States. Despite the huge charge, investors were cheered by the company's efforts to restructure. In early trading, shares of GENU jumped 0.14, or 14 percent, to 1.15. In the last 52 weeks, the issue has ranged from 0.96 to 3.9375.

Digex has positive news
Digex, Inc., the Laurel, Md.-based managed service provider (MSP), yesterday announced revenues of $55.2 million for the quarter-ended December 31, 2001, compared with $57.9 million a year ago.

Full-year 2001 revenue totaled $214.4 million, a 28 percent increase over 2000 revenues of $168.1 million. Managed servers totaled 3,588, with average monthly revenue per server of $4,414.

Gross margin in the quarter totaled 49 percent, with full-year gross margin at 44 percent. EBITDA losses narrowed to $3.6 million in the quarter with full-year EBITDA losses totaling $46.3 million.

Net loss available to common stockholders for the quarter totaled $46.7 million, or $0.73 per share while full-year net loss was $192.5 million, or $3.00 per share.

"Through 2001, Digex continued its strategic focus in the areas of innovation, growth and leadership as we enable our clients to move business computing and content to the Internet," said Mark Shull, president and CEO of Digex.

"Together with WorldCom, we believe to be better positioned than ever to meet the growing market demands going into 2002," he added.

Both firms added 80 new customers in the quarter, up 54 percent over new business in the fourth quarter of 2000.

"Continuing with our strength in the enterprise market, we ended the year with 78 percent of our revenue coming from that segment," says John Callari, Digex's senior vice president of sales.

"The fourth quarter closes out a strong year for Digex with continued success in our development efforts and solution offerings. One of our key accomplishments is the joint launch with WorldCom of Managed Express Hosting targeted at mid-size businesses," said Rebecca Ward, president of marketing, product management and engineering at Digex.

"This is a significant milestone for us as it marks the first real service initiative developed jointly by WorldCom and Digex. We worked together to determine customer requirements, service packages and price points, exemplifying the value our alliance."

Interliant targets SMBs
Interliant, Inc., the Purchase, N.Y.-based ASP, today launched an enhanced version of its INIT Host platform in support of the company's INIT Branded Solutions program, which allows partners to provide its hosted solutions suite to the small and medium-sized business (SMB) market under their own brands.

Partners can private-brand, co-brand, or outsource all or portions of their technical and operational functions to Interliant, including interfaces to an online order system, billing, customer care and technical support functions.

Interliant says its INIT Host platform architecture allows partners to provide their SMB customers with technologies including: EMC storage, Dell PowerEdge servers, Sun Enterprise servers, Openwave Internet e-mail, Trellix site creation, Urchin Web statistics, and Miva e-commerce solutions.

The firm also provides a development team to enhance the platform when necessary and the Enterprise Control Center (ECC) monitors all platforms, network devices, firewalls, and hosted products to minimize downtime.

"Interliant continuously assesses features and options, adding functionality to our integrated hosting platform to provide the best product mix for our INIT Branded Solutions partners," said Mike Hoffman, vice president of webhosting for Interliant.

"The INIT Host platform offers our partners the opportunity to leverage our products and services without the burden of a large IT investment."

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