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The strange success of Cable & Wireless

If you can keep your data hosting business when all about you are losing theirs...
Written by silicon.com staff, Contributor on

If you can keep your data hosting business when all about you are losing theirs...

That the analysts miscalculated the take up curves for web hosting and co-location services is no great news. The market is limping forward, with much unused capacity out there.

But in the same vein as today's Behind the Headlines programme, which is all about downturn survivors, it is much more interesting to consider one of the companies in this space currently doing well - Cable & Wireless.

The joke always was that this venerable UK institution - which grew up and grew rich in the days of 'the empire', in regions such as the Far East and the Caribbean - had one of the most old-fashioned of names. Then, of course, 'cable' and 'wireless' became two of the hottest areas across the industry.

Irony number two is that C&W then put itself in its current position partly by selling its cable interests (Cable and Wireless Communications and its share in Hong Kong Telecom, albeit a telco) and its wireless businesses (including its share of One2One). It sold while the market was high, amassing a cash mountain.

Cue the predictable calls from City brokers for the company to do something with the cash - either give it back to shareholders, or surrender it and itself to an indebted buyer. Yes, potential suitors such as BT, Deutsche Telekom and various US outfits have graced the tech gossip columns in connection with C&W over the past couple of years.

Only C&W and its then fledgling CEO Graham Wallace held firm. And, in line with its strategy of focusing on internet data services, it bought Digital Island. Now, still with wads in the bank, it is hinting at cherry-picking assets from once high-flying players Exodus and PSINet.

It looks like the company is setting itself up well for a time when web hosting really does meet those analyst house targets.

Can it weather the storm without being blown off course? Who knows. But it does appear that from an almost unique position of strength its future is in its own hands.

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