C&W Cuts: How Deep?

Speculation about the future of Exodus is growing amid expectations of impending cuts in Cable & Wireless' Global division. That includes rumors that C&W may make deep cuts at Exodus or even exit the hosting business altogether, a possibility raised earlier this week in the British media, including the Financial Times. At first blush, the reports seem hard to believe. And yet, this has been a year in which the truth has often seemed stranger and wilder than any rumors.

The ominous reports about C&W's hosting operations emerged Monday, following active trading in the company's shares on the London exchange. The Financial Times attributed the activity to leaks about the outcome of a strategic review of Cable & Wireless' operations, which is expected to be announced on Nov. 13.

"C&W initiated the review last month and, according to market whispers, directors were presented with an outline of its most important conclusions last week," according to the FT story. "If you believe the talk, it will see a significant chunk of the group's Global unit, which includes all its Web hosting activities, shut down as it struggles to become profitable." If you have a FT Level 2 subscription, the full article is available here.

Similar reports appeared in the Times of London, which reported that Investec Securities "suggested that the telecoms carrier is likely to announce its withdrawal from the US at its first-half figures on November 13. The broker believes such a move would entail restructuring costs of £800 million, but would pull its key C&W Global division back into break-even in the UK and Japan."

Speculation about Cable & Wireless is a major sport in the British financial media. But the reports come on the heels of C&W's rapid exit from many North American Internet access contracts (which were sold to New Edge Networks last week) and persistent rumors of large job cuts.

Just another wild rumor? Stay tuned.