September 26, 2001 12:30 PM PDT
Exodus files for Chapter 11 bankruptcy
Exodus Chief Executive William Krause said the actions allow the company to continue to provide service to its customers.
"This restructuring action ensures we have the wherewithal to do that and our daily operations continue uninterrupted as before," Krause said in a statement.
The stock, which hit a 52-week high of $62.38 last September, closed at 17 cents Tuesday.
The company said it secured $200 million in financing from GE Capital. That may not last long; Exodus burned through almost $300 million in cash in the first six months of this year, according to U.S. Securities and Exchange Commission filings.
Exodus had $616 million in cash on hand at the end of the second quarter and had been looking for new financing, which could have enabled it to scrape through until it reached back into the black.
The company's Web-hosting business has reflected the boom-and-bust cycle of the dot-com sector. At the height of the bubble, its business--which consists of managing and monitoring clients' Web sites and Internet-based applications on powerful servers in secure locations--thrived.
But as its dot-com clients died off, so did much of its revenue, although Exodus had been able to sign up new clients.
Although Exodus is one of the leaders in the sector, it hasn't had that much other business to fall back on, as opposed to competitors like IBM. Even so, investors still expressed interest in the stock, saying the company could at least be a takeover target.
Earlier this month, CEO Ellen Hancock left, joining a long list of executives who have fled the ailing company. Hancock was replaced by director William Krause, who has served on the board of directors since June 2000.
Exodus posted a $583.4 million, or $1.05 per share, loss for the second quarter, about 100 times more than its loss in the year-ago quarter. In June, the company revealed it was spending money faster than previously thought, sending its stock plunging.