Watts (chipotle) wrote,

Watching old companies disintegrate

I've been hearing about Intermedia's slow dismantling. I still have friends who work there; this is the company I left to go to NetPoodles. You might think that in retrospect I'd consider that to have been a mistake, but it's hard to say: I was actively looking for other work for a variety of reasons, particularly once Intermedia had been purchased by WorldCom. I figured my group wouldn't be long for the company, and as it turned out, I was right. As it is now, only a handful of people I remember are still at Intermedia--I think there's only two from the WAN engineering group I was with, and they both got their notices at the end of last month.

This came to mind because on a whim I checked Digex's stock price the other day. Digex was a "backbone" internet carrier a few years back when they were bought by Intermedia; Intermedia kept their networking group and spun Digex back off as a controlled subsidiary doing managed web hosting, the Next Big Thing of that moment in history. At one point Digex's stock price was something ungodly like $150 a share, and even as the sector started to cool down it was in the $60s. By the time I left Intermedia it was down in the $20s and falling, and not worth the effort of exercising the few stock options I had in it.

At the end of February, Digex was delisted from the NASDAQ for not being able to maintain a $1 stock price. Looking at things historically, except for a brief rally up to $1.15 in November 2002, it hadn't been over $1 since April 2002.

The reason WorldCom bought Intermedia was for controlling interest in Digex. They didn't have any interest in Intermedia itself.

I was also wryly amused to note that Williams Communications has changed their name to WilTel. Why is this personally amusing, you ask? They used to be WilTel when they were a fourth-rate business phone company; Williams, the parent company, decided to sell off the phone company operations but keep the fiber lines. (Williams is actually an oil company and was able to use the right-of-ways they had for their pipelines to lay fiber. Clever, huh?) Williams Communications, in turn, sold space on their fiber to other companies. Until all of those companies went under, forcing Williams Communications into bankruptcy. When they came out of bankruptcy, poof! now they're WilTel again.

The punchline of this is that Williams sold the original WilTel to another fourth-rate business phone company called LDDS, about the time I started working for Intermedia in 1995. LDDS and WilTel had lackluster reputations in the industry, so they decided they'd give their merged companies a new name: WorldCom.

Meanwhile, through this all, NetPoodles keeps going, in much the same way they have been for the last few years--they keep getting funding a few million dollars at a time. The network services group they bought last year does generate revenue, so they can conceivably get to a point now where they can tread water indefinitely. Going by pure logic, their odds don't look good, but their ability to consistently snatch defeat from the jaws of victory is clearly rivaled by their ability to survive self-inflicted wounds, so I don't think I could bet against them. Even so, the signs are that their "investment" is increasingly in the form of loans and personal investments from executives, which doesn't bode well.

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