Global Crossing, the Bermuda-based telecommunications firm, said last month it is considering spinning off its newly acquired GlobalCenter Web services division in a public stock offering. The addition of a seasoned communications executive like Hindery could help solidify that strategy, giving the services division strong, new independent leadership.
Hindery announced he was leaving the top slot at AT&T's cable and broadband Internet division in October, following a stormy eight months spearheading Ma Bell's cable TV and high-speed Internet strategy. He will join GlobalCenter as CEO and chairman, Global Crossing said.
Hindery is a valuable recruit for Global Crossing, which is trying to merge its international long-distance network and Web services division into a powerhouse that can rival larger communication players such as AT&T and MCI WorldCom.
"Leo Hindery is an entrepreneurial executive with world-class experience who has created value in every situation he's been involved in," Global Crossing chairman Gary Winnick said in a statement today. "No one is better qualified than Leo to make the most of GlobalCenter"
Winnick said he hopes to sell a minority stake in GlobalCenter in a public offering, or offer a tracking stock for the unit in "the near future."
The executive came to AT&T early this year, after the long-distance company bought cable firm Tele-Communications Inc. (TCI). Hindery had helped rebuild TCI into one of the most powerful cable firms in the country, after several years of financial difficulties.
His short tenure at AT&T proved stormy, however. He and AT&T affiliate Excite@Home CEO Tom Jermoluk had well-publicized differences of opinion over how the cable Internet company should operate, temporarily casting a cloud over that firm's future.
Hindery also was faced with the difficult goal of sealing agreements to offer telephone service over other cable networks such as those owned by Comcast, Cox Communications and Time Warner. The telephone strategy was delayed as AT&T focused on sealing its merger deal with MediaOne, as well as by regulatory concerns about AT&T's growing power in the cable industry.
The former cable executive will join another AT&T alumnus, Global Crossing CEO Bob Annunziata. Annunziata served as president of AT&T's business services division prior to Hindery's arrival.
GlobalCenter was acquired by Global Crossing earlier this year after a bidding war with Qwest Communications International.
Analysts said hiring Hindery's would likely prove a good move for Global Crossing, even though the former cable executive's experience in the Internet realm has been limited.
"Hindery's got a great reputation among cable folks," Forrester Research analyst Jeanne Shaaf said. "I'm not sure exactly how that translates to the Web hosting business. But a good manager is a good manager."
Analysts say GlobalCenter is well placed to compete against hosting operations such as Exodus and Digex, since it operates its own telecommunications network. That potentially allows it to bundle services more cheaply and efficiently than stand-alone hosting firms.
AT&T and MCI WorldCom have recently bolstered their own Web hosting divisions, providing new competition to the market leaders, however.
Growth prospects for the Web hosting business are huge. Although industry players grabbed about $2 billion in business this year, Forrester Research estimates that by the end of 2003, the market is expected to be worth $14.6 billion.
The undersea cable firm would be unlikely to spin off Hindery's division entirely, however. Annunziata and Winnick each have touted the Web host's Net expertise as one of the key reasons they were interested in purchasing parent its parent Frontier Communications earlier this year.