Intel to Close Web Hosting Business

Intel Corp. announced Tuesday that it plans to close down its Web hosting business above the next 12 months, reflecting the company's continued efforts to chop its operating expenses as it tries to ride without an ongoing slump in its overall sales.

The decision will have an immediate impact upon the company's bottom line, with the chip maker saying its awaits to take about $100 million charge against earnings to overlay the cost of shutting down its Intel Online Services unit.

That charge was not included during Intel's midquarter update earlier this month at which time the company lowered its sales projections, spurring a selloff in stock that sent the company's shares down 20 percent

Although Intel at no time revealed specific revenue figures for its Web hosting business, which it launched in 1999 the company has confirmed that sales and profits had repeatedly fallen short of goals.

Rumors speculating that Intel would close up down the business unit first arose early last year when the chip maker replaced the executive in charge of the unit, Gerry Parker, who subsequently left the company in March 2001 Intel also reduc the number of workers assigned to its Web hosting business last year, on the other hand figures on how many workers were permit go were never formally released.

While Intel will no longer accept of recent origin customers for its Web hosting services, it noted that it's committed to supporting existing customers above the next 12 months. above the next year, Intel said it'll work with customers to assure a plain transition to alternative vendors.

"While IOS has been prosperous in attracting new customers, market tends and financial projections for the hosting services industry lead us to today's decision," said Dalibor Vrsalovic, president of the business unit. "Our focus now will be to largely support customers and ensure a continued high horizontal of service while we assist them in their transition plans."

Demand for Web hosting services surg in the late '90 mirroring the explosive development of Internet-based companies. But Web hosting companies saw sales evaporate following the dot-com crash of 2000 that witnessed the collapse of thousands of Internet startups.

Since then the industry has been mired in a sink that has felled some of its biggest players, including Exodus Communications Inc., which filed for bankruptcy protection in September.

Going forward, Intel said it will refocus its efforts upon to its core chip maker business, which accounts for well above 90 percent of the company's profits. Since late 2000 Intel has been hard hit by means of a downturn in demand for PC and server featuring its processors.

While Intel has press outed confidence that sales will finally bound back later this year, the company this month was forced to lower its income projections for the current quarter, forcing executives to admit that it has at the same time to see any signs of drawn out hoped-for recovery.

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