June 10, 2003 -- Sprint will exit the web hosting business, laying off 500 workers, shuttering eight huge data centers and taking a charge of between $400 million and $475 million, the company said today.
Sprint said it will close E|Solutions hosting centers in Atlanta, Boston, Dallas, Denver, Los Angeles, New York City, Sacramento, Calif. and Santa Clara, Calif. Two other data centers in Kansas City and Reston, Va., will be converted to other Sprint network functions.
The move, while widely anticipated, comes just a week after Cable & Wireless announced that it will depart the US hosting business and will sell or close operations bought from Exodus and Digital Island.
Like C&W, Sprint said it didn't see a profitable future for the hosting centers, which range between 75,000 and 150,000 square feet of space. The decision was the result of "an ongoing evaluation of the company's strategic direction by Sprint's new executive management team."
"Sprint's priorities have clearly been articulated and include growing top-line revenue and protecting and improving the company's bottom line," said Howard Janzen, president, Global Markets Group. "Those priorities require us constantly to monitor and review which areas make both economic and strategic sense to pursue on behalf of customers, investors and shareholders."
Sprint said it will transition existing hosting customers to other providers and discontinue the direct sale of hosting products to enterprise business customers.
Winding down the hosting unit will result in pretax charges of between $400 million and $475 million. About $300 million of that reflects the impairment of hosting assets, with the remainder being set aside to buy terminate leases, migrate customers and pay severance to employees.
The hosting actions are expected to affect approximately 500 employees, who will likely be laid off before the end of 2003, according to Sprint.