Hancock Makes Exodous

Exodus Communications dropped another bombshell on its investors this week with an announcement that CEO Ellen Hancock is resigning her post.

by Michael Singer of siliconvalley.internet.com [September 5, 2001]

The Santa Clara, California-based company that hosts, manages and services other companies Web sites says board member L. William Krause will take over as both chairman and chief executive officer of the company once formidable firm.

"We agreed with Ellen that it's time to transition the leadership of the company as it maneuvers through challenging times," says Krause.

Krause, who retired as chairman of 3Com Corporation in 1993, is president of LWK Ventures, a private investment company in Silicon Valley.

Sinking ship?
Analysts are quick to point out that the changing of the guard combined with other recent problems suggests that the company may be very close to bankruptcy.

"I predicted a year ago that the company is and I think there is no reason to change my mind," says Briefing.com analyst Robert Green. "I think they over extended themselves. Revenue growth is not the answer to the company's problems.

The company suggested two-weeks ago that it would entertain a takeover bid. This in the face of cutting its staff by up to one-third and reducing costs in other areas.

Still, the hope is that Krause can salvage the company's assets and stop the bleeding.

"During Ellen's tenure, Exodus enjoyed phenomenal growth and was able to build a world-class data center infrastructure and managed services offerings, benefiting greatly from her technology expertise," says Krause. "The focus now is to implement an operating plan that reflects the realities of a tough economic environment."

In its last quarterly meeting, 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. The company says it expects to end the year with $200 million.

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