Interland (NASDAQ:INLD)
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Interland (NASDAQ: INLD), a leading provider of Web
sites and online services for small and medium-sized businesses, today
announced that it has sold its dedicated server assets to Peer 1
Network Enterprises, Inc., a provider of high performance Internet
infrastructure, for a purchase price of approximately $14 million in
cash. Under the terms of the agreement, Peer 1 Network acquired
approximately 8,300 servers, as well as operating facilities in
Atlanta, GA, Miami, FL, and Fremont, CA. The dedicated server assets
accounted for approximately 37% of Interland's revenues for the
nine-month period ending May 31, 2005.
"The sale of the dedicated server assets is an important milestone
in our restructuring plan and allows Interland to invest in our core
lines of business - providing Web sites and online services to small
and medium-sized businesses," said Jeffrey M. Stibel, CEO of
Interland. "This transaction gives the company increased financial
flexibility and is the first step toward focusing on our core
competencies while realigning our revenues with high margin, high
growth business initiatives."
The company's dedicated customers, which represent approximately
5% of Interland's total accounts, should experience no immediate
change in services and should receive continuity of Web site
operations under Peer 1 Network. The goal is to ensure a seamless
transition for employees and customers, enabling both companies to
focus on their core lines of business. Interland will provide more
detail on the transaction's impact on its business in its future SEC
filings and on the next quarterly earnings conference call.
Disposing of the dedicated server assets will allow Interland to
realize significant savings, including long term lease obligations
associated with the three data center facilities, capital expenditures
associated with the ongoing purchase of dedicated servers, multiple
bandwidth contract eliminations, and a substantial reduction in the
number of employees. The $14 million in gross cash proceeds will be
reduced by $2.8 million that will be held in an escrow account for 12
months and by approximately $1.4 to $2.2 million in
transaction-related expenses. The company expects that the transaction
will have a net negative effect in the range of $1.5 to $3.0 million
on its reported net earnings for its fourth quarter mostly as a result
of non-cash charges.
Under the deal, Interland employees will continue to run the
dedicated server business, under Peer 1's management, for
approximately 90 days after closing. Peer 1 will have the opportunity
to extend employment offers to those employees during the 90-day
transition period.
About Interland
Interland, Inc. (NASDAQ: INLD) is a leading provider of Web sites
and online services focused on helping small and medium-sized
businesses achieve success by providing the knowledge, services and
tools to build, manage and promote businesses online. Interland offers
a wide selection of online services, including standardized Web
hosting, ecommerce, application hosting, Web site development, online
marketing and optimization tools. For more information about
Interland, please visit www.interland.com or call at 800-336-9883.
About Peer 1 Network
Peer 1 Network, the first Internet infrastructure provider to
offer a 100% uptime guarantee, delivers leading-edge server
colocation, IP network and customer support solutions to
performance-hungry customers worldwide. Since its inception in 1999,
the company has grown to 12 state-of-the-art data centers and 17
points of presence across North America and Europe, all connected by
Peer 1's world class IP network. Peer 1 serves customers who range
from gaming to VoIP, to enterprise. The company's headquarters are
located in Vancouver, Canada and the stock is traded on the TSX
Venture exchange under the symbol PIX. In 2004 Peer 1 acquired
ServerBeach Ltd, a self-managed dedicated server company. For more
information visit www.peer1.net.
Forward-looking Statements
Except for the historical information contained in this press
release, statements in this press release may be considered
forward-looking statements. These forward-looking statements include,
but are not limited to: focus on our core competencies and realign our
revenues with high margin, high growth business initiatives, our goal
of a seamless transition for employees and customers, and our
increased flexibility. Actual results may differ materially from those
contained in the forward-looking statements in this press release.
Factors which could affect these forward-looking statements, and
Interland's business, include but are not limited to: the ability to
operate within budgeted expense, the ability of the company to improve
customer satisfaction and expand its customer base as planned, our
growing dependence on our reseller and other indirect sales channels,
general economic conditions, the impact of competition, quarterly
fluctuations in operating results, the loss of customers with failing
businesses and customer churn in general, customer acceptance of new
products and services, the possible lack of availability of our
restricted investments, the retention of key employees, investments in
new business opportunities, higher than expected costs of litigation
and the impact of liabilities that could carry over from Micron
Electronics' discontinued operations. Certain of these and other risks
associated with Interland's business are discussed in more detail in
its public filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q and its Current Reports on Form 8-K, and its proxy
statement. Investors should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. The Company does not undertake to update its
forward-looking statements. The Company has filed or will shortly file
a Form 8-K containing additional information regarding this
transaction, and copies of the primary documents. Please refer to the
Form 8-K for additional information.