About Murray Cass Expertise I am eager to help investors find their way through the muddle of tech investing. I can answer questions concerning tech investing, financial reports, stocks, and options. Having worked in the computer industry for over 20 years I have a good general knowledge of computer technology. I have read over 100 investment books -- mostly the old ones. I spend my time doing investment research, attending annual shareholder meetings, and managing portfolios.
Experience Professional Engineer, MBA, over 20 years experience in computer industry, 9 years intensive investing experience.
Question what can you tell me about exds (exodus communications)
Answer Hi Eric,
EXDS is the largest web hosting company. It also offers various outsourcing services It was run by Ellen Hancock (former Apple CTO) until her recent resignation.
EXDS has several very expensive data centres all over the world. It had to incur huge debt to build those data centres.
With the demise of many dot-coms EXDS has lost a lot of revenue. It still is maintaining sales but growth has slowed from the many years of hyper-growth it did experience.
EXDS built up the business on the assumption that the Net had lots of growing yet to do. IMHO that was correct but they did not anticipate the recent slowdown and it is likely that they are not sufficiently financed to weather the storm. Their balance sheet is bad and getting worse as they are burning lots of cash. The company is up against the wall. It needs business to improve seriously and it needs a capital infusion. They are already up to their necks in debt and with a penny stock price they face delisting and little prospect of getting equity financing.
A buy out? Why would anyone want to get stuck with all that equipment and the huge debt?
Looks pretty dismal to me. I looked at EXDS a year ago (when it was trading at around $25) and was scared by the huge debt. I could not see any fundamental basis for the stock price. Any company structured like that is taking a big gamble. And it looks like EXDS lost.
