-Ian.

—- http://news.com.com/2100-1033-978126.html Cisco, SBC link arms for outsourcing

By Reuters December 17, 2002, 5:29 AM PT

Cisco Systems and SBC Communications announced on Tuesday a pact potentially worth billions of dollars and designed to encourage companies to outsource services.

Cisco, the maker of equipment that directs Internet traffic, and SBC, the U.S. local telephone company, said their new three-and-a-half-year marketing and sales agreement will enable businesses to cut costs by shifting various communications services to SBC, starting with secure VPNs (virtual private networks).

Under the deal, corporate customers will cut costs and outsource nonstrategic work. SBC will generate revenue by offering the services, while Cisco will ring up sales as the preferred equipment provider to the phone company.

“The notion of becoming a key supplier of infrastructure gear for an incumbent (telecom) player is really a big deal for Cisco because it’s sort of the temple of carrier-class thinking that when you get validated by the likes of SBC…you really have cracked a very tough nut,” said Roland Acra, chief technology officer of Cisco’s service provider business.

The SBC pact is Cisco’s first deal on a phone company’s traditional voice network. Generally, Cisco supplies equipment for data networks.

Other services SBC will eventually offer customers using Cisco equipment include integration of voice, data and video on a single network, advanced security options, wireless local area networks, and managed Web and storage-area network hosting.

San Jose, Calif.-based Cisco has pushed to boost its smaller telecom business by using its strong ties to corporate customers to sign deals with telecom service providers. Telecom accounts for about 20 percent of Cisco’s sales, and Cisco wants to boost that to more than 40 percent over the next five years.

The company derives the bulk of its revenue from large corporations outside the telecom sector. In turn, SBC is trying to take advantage of Cisco’s dominance in the enterprise sector to boost its business.

“Focus on managed services is a fundamental shift and we felt doing things with Cisco made a lot of sense because of their presence in the market for the enterprise perspective,” said Mike Reddout, SBC’s vice president of emerging services.

VPNs allow businesses to securely use the Internet to share files and other data.

For the past couple years, SBC has been one of the largest resellers of Cisco gear. SBC, based in San Antonio, Texas, also recently said it would buy high-end Cisco routers, machines used to connect computer networks for the transmission of data and information, for a nationwide network delivering new online services to businesses.

Financial details of the new agreement were not disclosed. But Carlos Dominguez, Cisco group vice president for the U.S. service provider business, said that the market for such managed services was a multibillion-dollar opportunity. SBC said its has seen annual growth of 25 percent in demand for managed services and expects that to continue.

Dominguez said the deal with SBC is larger in size and scope than similar deals previously signed with British-based Cable & Wireless or with U.S. long-distance telephone carrier Sprint.

In late April, Cisco said that Web hosting company Cable & Wireless would use Cisco equipment under a four-year partnership to offer companies a single, Internet-based communications network that hooks up all their desktops, allowing them to cut costs and operate more efficiently.

Cisco said at the time that the Cable & Wireless deal was worth hundreds of millions of dollars for both companies. Cisco signed its partnership with Sprint in December 2001.

Story Copyright © 2002 Reuters Limited. All rights reserved.

———–

-Ian.

Begin forwarded message:

> ———- Forwarded message ———-
> Date: Mon, 09 Dec 2002 10:44:23 -0500
> From: Dave Farber
> To: ip
> Subject: [IP] VERY INTERESTING — Some execs scored big as company
> values
> plunged
>
> http://www.bayarea.com/mld/bayarea/business/4696887.htm

> Some execs scored big as company values plunged
> By Chris O’Brien and Jack Davis
> Mercury News
>
> Running companies that became almost worthless didn’t stop dozens of
> Silicon
> Valley insiders from pocketing billions of dollars by selling their
> stock
> during the tech boom and bust.
>
> The Mercury News examined the stock sales record of insiders at 40
> companies
> in Silicon Valley that have lost virtually all their value since the
> stock
> market peaked in March 2000. The executives, board members and venture
> capitalists at these companies walked off with $3.41 billion, while
> their
> companies’ total market value plunged 99.8 percent to a mere $229.5
> million
> at the end of September.
>
> It represented a remarkable transfer of wealth from the pockets of
> thousands
> of anonymous investors — from day traders to pension funds — into the
> wallets of executives and directors who turned out to be winners even
> when
> their companies became some of Silicon Valley’s biggest losers.
>
> Coming at a time of public discontent with corporate ethics, the
> disconnect
> between the performance of these companies and the executives’
> fantastic
> rewards is symptomatic of the problems that have ignited calls to
> reform
> executive compensation and corporate governance.
>
> “The people who bought the stock they sold are the victims here,”
> said
> Charles Elson, director of the Center for Corporate Governance at the
> University of Delaware. “This money was taken from investors who
> didn’t
> have the same information as these insiders and lost their money.”
>
> The Mercury News compiled a list of local companies whose stock price
> dropped at least 99.5 percent from March 2000, when the Nasdaq peaked,
> to
> Sept. 30, 2002. Those companies were then ranked by the amount of
> stock sold
> by insiders — roughly 300 — since the beginning of 1997.
>
> This means the list leaves off some spectacular flameouts where
> executives
> weren’t shy about selling stock. For instance, JDS Uniphase missed the
> cut,
> with a 97.1 percent drop, even though executives sold $1.17 billion in
> stock
> between May 1997 and November 2002, even as the optical components
> company
> was firing two-thirds of its employees. Also absent is software company
> Ariba, whose stock dropped 98.7 percent and where insiders sold $1.26
> billion between October 1999 and November 2002.
>
> The survey also excludes some of the valley’s household names. Not
> included
> are John Chambers, who between August 1997 and February 2000 sold
> $296.2
> million in Cisco stock; Larry Ellison, who in January 2001 sold $894.8
> million in Oracle stock; and Scott McNealy, who from May 1997 to July
> 2002
> sold $107.9 million in Sun Microsystems stock. These corporate giants
> generally are older and remain strong competitors even as their stock
> prices
> have tanked.
>
> Supposed good bets
>
> The 40 companies on the Mercury News list are primarily software,
> hardware
> and telecommunications companies — the infrastructure providers that
> were
> supposed to be good bets rather than flighty dot-coms.
>
> These companies are a seriously wounded bunch. While not true of every
> company, as a group, they have a variety of problems. Most had major
> restructurings that led to mass firings. Fifteen went bankrupt.
> Several more
> are running out of cash.
>
> Almost half the companies face lawsuits from angry shareholders. Five
> of the
> Top 15 companies had to restate earnings, some from periods when
> insiders
> were selling stock. And a handful of the companies have been cited in
> investigations by Congress and the Securities and Exchange Commission
> into
> investment banks accused of manipulating IPOs.
>
> Though option grants usually get the most attention, much of the stock
> sold
> by insiders at these companies were shares they gained from being
> founders
> or early-stage venture investors prior to IPOs. Once their standard
> 180-day
> lock-up periods ended, many of these insiders began selling their
> stock like
> there was no tomorrow.
>
> For some of their companies, there isn’t much of a tomorrow:
>
> € John Little, founder and CEO of Portal Software, sold $127.5 million
> of
> stock in Portal, which is on the verge of being delisted by Nasdaq.
> Portal,
> which sells billing software, topped the Mercury News list with
> insiders
> selling $704 million in stock — more than its total revenue since the
> May
> 1999 IPO.
>
> € David Peterschmidt, CEO of Inktomi, sold $90.5 million of stock at
> the No.
> 2 company on the list. Inktomi, once a promising Internet search engine
> company, in November sold off a major division to raise cash it needs
> to
> survive.
>
> € K.B. Chandrasekhar, founder and former CEO of the former Exodus
> Communications, cashed out $135.1 million in stock at the Web hosting
> company before it went bankrupt. Chandrasekhar is now founder and CEO
> of
> Jamcracker. Exodus was bought out of bankruptcy by Cable & Wireless,
> which
> recently announced more layoffs at the hosting division.
>
> € Dennis Barsema, former CEO of Redback Networks, sold $138.4 million
> in
> stock before he left in July 2000 after 2 1/2 years at the helm.
> Barsema
> later became CEO at Onetta, another networking start-up. He donated $20
> million in stock to his alma mater, Northern Illinois University.
> Meanwhile,
> Redback announced another round of layoffs Nov. 14 and says it may
> have to
> raise more financing to stay afloat.
>
> € Jerry Shaw-Yau Chang, former CEO of Clarent, sold a measly $16.5
> million,
> though insiders at his telecom company dumped $355.8 million. Mired in
> accounting irregularities, the company has restated financial
> statements for
> 2000 and part of 2001, and been unable to report earnings for most of
> 2002.
>
> € Thomas Jermoluk, former CEO of At Home, sold $50.3 million before the
> cable broadband giant filed for bankruptcy. The company, known as
> Excite@Home, once boasted a market value of $13 billion before
> vaporizing
> following squabbles with its main shareholder and partner, AT&T.
> Jermoluk is
> now a venture partner at Kleiner Perkins Caufield & Byers.
>
> Executives at every company contacted either did not return phone
> calls or
> declined to comment, in many cases citing pending litigation. The one
> exception was Frederick D. Lawrence, former CEO of Adaptive Broadband,
> who
> agreed — after speaking with his lawyer — to discuss executive
> compensation though not the specifics of his company.
>
> He pointed out that executive pay plans are publicly available and
> that most
> investors never bother to read them. And when insiders sell stock,
> they must
> also publicly disclose the sales in filings to the SEC.
>
> “People really work hard in these industries,” Lawrence said. “They
> spend
> hours away from friends and family. Although that’s not an excuse for
> any
> poor behavior.”
>
> No surprise
>
> However, Nell Minow, editor of the Corporate Library, a research
> center that
> focuses on corporate governance, said the heavy insider stock sales
> are no
> surprise. Minow is a leading critic of allowing insiders to sell their
> stock
> because it creates the temptation to push the envelope on things like
> accounting.
>
> “They sell the stock and then they restate the earnings,” Minow said.
> “That brings it one step closer to being a Ponzi scheme.”
>
> The increasing use of stock and options to compensate executives over
> the
> past decade grew out of a broader shareholder value movement. The idea
> was
> to align the interests of executives with the stockholders who, in
> theory,
> are more important than employees or managers.
>
> But the practice has come under fire from critics who say stock grants
> have
> forced executives to become too focused on short-term results and doing
> whatever it takes to boost the stock price. That in turn can lead to
> everything from laying off employees after a bad quarter to feeling
> pressure
> to bend or break accounting rules to make the numbers.
>
> “Their decisions are distorted,” said Neelam Jain, assistant
> professor at
> Jones Graduate School of Management at Rice University. “What the
> managers
> are trying to do is maximize their own profits and not the firm’s
> profits.”
>
> Graef Crystal, a leading compensation expert in Las Vegas, believes the
> problem has been overblown. He points out that while many executives
> sold
> their stock, many of them could have sold far more, which they elected
> to
> keep and which eventually became worthless.
>
> Did they know?
>
> “The fact that they left huge amounts of money on the table does not
> suggest they knew something was coming,” Crystal said.
>
> But the criticism of these insider stock sales continues to grow. That
> backlash increased in November, when the Conference Board released an
> annual
> survey of 2,841 companies in 14 industries that showed executive pay
> and
> perks continued to rise in 2001 even as the stock market and economy
> slumped.
>
> At the same time executive compensation has exploded, bankruptcies have
> soared and publicly traded companies are facing record numbers of
> shareholder lawsuits. According to the Securities Class Action
> Clearinghouse
> at Stanford Law School, the number of shareholder suits rose from 213
> in
> 2000 to 488 in 2001 — despite a law passed in 1996 by Congress to
> discourage such litigation.
>
> While many companies dismiss such litigation as a nuisance, observers
> say
> many corporate insiders still underestimate the anger of investors who
> lost
> big sums during the boom and bust and are still feeling burned.
>
> “This is not a victimless crime,” said Charlie Cray, director of
> Citizen
> Works’ Campaign for Corporate Reform. “The argument is that they’re
> taking
> risks. But they’re taking risks with other people’s money.
>
> “This is really a question of fairness.”

Telecoms group pays price for downgrade to ‘junk’ rating

Terry Macalister Monday December 9, 2002 The Guardian

Up to £1bn could be wiped off Cable & Wireless shares this morning – 50% of their value – as the City punishes the telecoms group for having its ADVERTISEMENT debt downgraded to “junk” status.

The massive sell-off threatens to further shred the battered reputation of chief executive Graham Wallace, who many believe will stand down as soon as a new chairman has been found.

Mr Wallace will try to stave off financial crisis at C&W by asking Deutsche Telekom to waive a £1.5bn indemnity that was triggered by Friday’s long-term debt rating change by Moody’s Investors Services.

The British telecoms group is likely to face further misery in the next couple of days as a massive shares sell-off would bundle it out of the FTSE 100 index of leading companies.

Talks with its banks were continuing through the weekend and there could be more credit downgrades from Standard & Poor’s and Fitch, which has C&W under review.

The company announced interim pre-tax losses of £4.4bn after writing down the value of assets by £3.5bn, and its stock has slumped to 83.5p, valuing the firm at just under £2bn.

Industry experts said C&W would see its shares heavily sold off today because there had been four profit warnings within 18 months which had left investors worried about more skeletons in the cupboard.

“I don’t think they are there yet but I think some will say that the company is effectively bankrupt, and certainly the shares will be hit extremely hard because C&W has repeatedly been valued on a worst case scenario. Management credibility is lost and I don’t think Wallace will survive the new chairman,” said one telecoms analyst.

C&W would not comment on the likely unseating of the chief executive but hotly denied there was any question of the company’s bankrupcy.

“Absolutely not,” said a C&W spokesman, pointing out the company has £3.8bn of gross cash and £2.2bn of net cash. “The maths does not add up to come to that conclusion.

“We are still left with plenty of headroom,” he added. The company had sufficient financial flexibility to restructure the global international telecoms arm – where much of the trouble has been found – and meet its debt obligations, he said.

The Moody’s downgrade affects an agreement in 1999 whereby C&W promised to indemnify Deutsche against any potential tax liabilities arising out of C&W’s sale to the German group of its stake in a mobile phone firm.

C&W sold its 50% holding in One2One for £3.45bn but, fearful of future tax commitments that may accrue, Deutsche made C&W commit itself to stump up £1.5bn if C&W’s credit ratings ever fell into “junk” territory.

The British group said it had taken advice from both fiscal and legal experts on the matter and still believed that no tax liabilities would accrue.

Asked whether it would be putting pressure on Deutsche not to insist on an indemnity that would force the UK firm to ring-fence £1.5bn of much-needed cash, a CW spokesman said last night: “I’m sure we will be looking to mitigate the situation in any way possible.”

C&W has been hunting for a new chairman since David Nash, the chairman-designate, said he would not be taking up the post.

The company has announced plans to cut 3,500 jobs at its struggling global telecoms arm, which must become cash-positive by March 2004 or leave the group facing further debt rating downgrades.

———–

-Ian.

—- http://biz.yahoo.com/bw/020822/222386_1.html

Thursday August 22, 6:15 pm Eastern Time

Press Release SOURCE: Akamai Technologies

Court Awards Akamai Broad Permanent Injunction Against Cable & Wireless

Cable & Wireless Ordered to Immediately and Permanently Shut Down Digital Island Footprint 2.0 Service

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Aug. 22, 2002–Akamai Technologies, Inc. (NASDAQ: AKAM – News) today announced that the Federal District Court in Boston has enjoined Cable & Wireless Internet Services, Inc. from making, using, selling, offering for sale, or importing into the United States, the patented inventions of Claims 1, 3, 5, and 9 of U.S. Patent No. 6,108,703, and from active inducement of infringement of these claims. The Court’s Order requires Cable & Wireless to shut down Digital Island’s Footprint 2.0 service as configured and described at trial. That service was recently rebranded under the Exodus name.

“This major victory vindicates our patent rights and the value of Akamai’s industry-leading technology,” said George Conrades, chairman and CEO of Akamai. “We will now turn our attention to seeking full compensation from Cable & Wireless for the long-standing infringement of this patent.”

“The injunction is very broad, and we do not believe that Cable & Wireless’s post-trial attempts to design around these claims have succeeded,” added David Judson, Akamai’s patent counsel. “If Cable & Wireless continues to operate its infringing content delivery service, we will seek to hold them in contempt of the Court’s Order.”

About Akamai

Akamai is the leading provider of edge computing solutions, delivering secure content and distributed applications across the Internet, intranets, and extranets. These solutions enable customers to achieve optimal results from their e-business initiatives, thereby reducing the cost of ownership, improving return on investment, and creating new revenue streams. Akamai’s globally distributed edge computing platform comprises more than 12,900 servers in more than 1,000 networks in 66 countries, ensuring the highest levels of availability, reliability, and performance. Headquartered in Cambridge, Massachusetts, Akamai provides services and world-class customer care to hundreds of successful enterprises, government entities, and leading e-businesses worldwide. For more information, visit www.akamai.com.

Akamai Statement Under the Private Securities Litigation Reform Act

The release contains information about future expectations, plans and prospects of Akamai’s management that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including, but not limited to, the dependence on Akamai’s Internet content delivery service, a failure of its network infrastructure, the complexity of its service and the networks on which the service is deployed, the failure to obtain access to transmission capacity, our ability to protect our intellectual property rights and inventions from third party challenges and other factors that are discussed in the Company’s Annual Report on Form 10-K and other documents periodically filed with the SEC. * (c)2002 Akamai Technologies, Inc.

—– http://thewhir.com/marketwatch/cw020102.cfm Cable & Wireless Completes Exodus Acquisition, Re-brands Hosting Division

Adam Eisner, theWHIR.com

February 3, 2002 — (WEB HOST INDUSTRY REVIEW) — Telecommunications firm Cable & Wireless announced Friday that it had completed its acquisition of selected assets of Web hosting firm Exodus Communications. This follows the approval of the transaction by the United States Bankruptcy Court for the District of Delaware, granted January 17.

Cable & Wireless first announced its intention to purchase the hosting firm for $850 million (US), including the assumption of about $270 in assumed liabilities, in late November. However, C&W said today that the final purchase price for the company would be $750 million, $100 million lower than originally estimated. The lowered price is “a result of the finalization of certain estimates outstanding at that time,” a release from C&W said.

Under the agreement, C&W picked up 26 of Exodus’ 44 data centers, representing about 4 million square feet of gross space.

The British telco also said its Web hosting division in the USA will be re-branded “Exodus, a Cable & Wireless Service.” The division will be comprised of both Exodus Communications and managed hosting firm Digital Island, which C&W purchased for $340 million last May. Bill Austin, who joined Exodus in July 2001 and is currently the company’s Chief Financial Officer, will become CEO of the new division.

“Leveraging the global infrastructure and financial strength of Cable & Wireless, we can now offer a broad range of integrated outsourcing solutions to support customers’ evolving business needs,” Austin said.

Exodus originally filed for Chapter 11 bankruptcy protection in September, after having difficulty dealing with its own rapid expansion and the fallout of dot-com businesses, many of which were Exodus clients. According to C&W, Exodus hosts 46 of the Internet’s 150 most visited sites, and has approximately 3,500 customers.