Cable & Wireless America customers praise buyout plan

Users say hosting services ran smoothly while CWA sought a buyer

The news that troubled hosting company Cable & Wireless America (CWA) is being sold to turnaround and investment firm Gores Technology Group LLC (see story) is bringing customers a sense of relief.

"It seems to bring some uncertainty to an end," said Ron Pellowe, director of systems and networks at Braintree, Mass.-based EquipnetDirect Inc., an online equipment asset marketplace and a CWA hosting customer. "It puts a much stronger financial backer behind them."

The Gores purchase of CWA's operations for an estimated $125 million "makes it brighter," Pellowe said of the company's future. "What I need to hear is that they're not planning to do more hosting [center] closings," something CWA did earlier as a cost-saving move.

Gores Technology Group said yesterday when the sale was announced that it plans to continue CWA's services and get U.S. operations back on their feet.

Pellowe said his company considered finding a new provider when CWA made cutbacks last year and then announced its pullout from the U.S. market in June (see story). But EquipnetDirect eventually chose to stay the course until the situation stabilized.

"We looked a bit but didn't switch," he said. "We felt the data centers were fairly stable even though the company was having changes."

Steve Wigginton, vice president of marketing, operations and development at San Jose-based Neoforma Inc., which builds online health-supply marketplaces, said he wasn't surprised by the Gores buyout because he has been kept up to date by officials at CWA and its parent company, London-based Cable & Wireless PLC.

"We're certainly happy to see what looks like a favorable resolution," Wigginton said. "It's certainly consistent with what they've been angling to do," to find a buyer and keep operations going for customers.

"Service has continued to be good. We haven't had a service issue" since CWA has been providing hosting, he said.

C&W spent $575 million to buy the U.S. operations as part of a deal with former hosting company Exodus Communications Inc. in November 2001, after Exodus went bankrupt, leaving customers unsure about where they would get services.

A year later, in November 2002, C&W announced a restructuring that cut back its U.S. operations, followed by the June announcement that the company was seeking an exit strategy in the U.S. market.

Yesterday's buyout deal included an announcement that CWA has filed voluntary petitions for reorganization under Chapter 11 in the Bankruptcy Court for the District of Delaware in Wilmington. The Chapter 11 filing will allow the company to continue to operate and serve customers while the sale takes place.

Rick Thimble, IT manager for the U.S. and Europe at plastic parts maker Moldflow Corp. in Wayland, Mass., said he stayed with CWA through its troubled times and has been rewarded with good service -- and what he hopes will be a good relationship with its new owner. "I didn't see any need to react that quickly on this," Thimble said. "We assessed it and we figured they would do due diligence" and help customers if a new buyer couldn't be found to continue the operations.

"I'm happy with the service," he said. "What they're doing from a business perspective, I was expecting."

Yesterday's sale announcement was also welcome news to C&W Web hosting customer National Semiconductor Corp. "I'm thrilled they've completed the action and now we can fully get back to business," said Phil Gibson, vice president of Web business and sales automation at National Semiconductor in Santa Clara, Calif.

"Performance has been good, actually, since the rumors [of C&W's plan to pull out of the U.S. market] began nine months ago. I'm pretty pleased. We've experienced solid service with improving performance," he said.

He is so pleased, in fact, that National Semiconductor has extended its contract through June.

Not every customer, however, waited for CWA to sort out its future.

Sean Armstrong, senior Internet manager at Network Intelligence Corp., a security event management company in Walpole, Mass., began shopping for a new hosting provider after C&W made its November 2002 cutbacks (see story). Recently, his company chose AT&T Corp. as its next hosting provider, and that transition is under way.

"We were sick of the uncertainty," Armstrong said.

Laura Rohde of the IDG News Service contributed to this report.

Copyright © 2003 IDG Communications, Inc.

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