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CEO Hancock out at Exodus

Exodus Communications Chief Executive Ellen Hancock resigns from the Web hosting company and will be replaced by director William Krause.

Exodus Communications Chief Executive Ellen Hancock resigned from the Web hosting company Tuesday and will be replaced by director William Krause, the company announced.

Krause, who has served on the Exodus board of directors since June 2000, will serve as chairman and CEO. Formerly chairman of 3Com until 1993, Krause is president of private investment firm LWK Ventures. He also has worked at Hewlett-Packard and Storm Technology.

Hancock, a longtime Silicon Valley technology executive with stints at IBM, Apple Computer and National Semiconductor, presided over Exodus as it grew to become the industry's largest Web hosting company. But Hancock's tenure also saw Exodus' business hammered by the demise of numerous dot-coms, which sent the company's shares plummeting.

"During Ellen's tenure, Exodus enjoyed phenomenal growth and was able to build a world-class data center infrastructure and managed services offerings, benefiting greatly from her technology expertise," Krause said in a statement. "We agreed with Ellen that it's time to transition the leadership of the company as it maneuvers through challenging times."

Stock in Exodus fell nearly 24 percent to a 52-week low of 67 cents per share by market close Tuesday. Shares have traded as high as $66.44 and as low as 82 cents in the past year.

"It's the end of an era. You have to take this in the context of completely collapsing shareholder value in the company and a total change in the business model of the industry. In general, when you have a CEO stuck between two major factors like that, they end up having to leave," said Pascal Aguirre, vice president at Adventis, a Boston-based business strategy and consulting firm.

Companies in the Web hosting industry--whose businesses consist of powerful server computers housed in secure data-center facilities--manage and monitor Web sites and Internet-based software applications for their customers. The sector, which includes AboveNet, Digex and Intel Online Services, among others, boomed during the height of dot-com growth but has been forced to shift strategy somewhat in light of the many failures. The Web hosters are now offering a broader range of so-called managed services.

Gartner analyst Ted Chamberlin says the challenges facing Exodus Communications' new CEO, L. William Krause, might cause anyone pondering the top seat at a high-flying IT company to think again.

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Exodus acquired GlobalCenter, the Web hosting unit of communications carrier Global Crossing last year. The deal solidified Exodus' place as the leading Web hosting company. But as more and more Internet start-ups died off, Exodus and other Web hosting companies were forced to focus more heavily on big business and Fortune 1000 customers. American Airlines, for example, is an Exodus customer.

Exodus has "done a good job of recognizing the need to change, and they have a few highly publicized wins," Aguirre said. "But at the end of the day when you analyze the revenue, they probably still have 90 percent of their revenue from colocation."

When asked in an interview last month about recent executive departures and rumors of a board-level fight for the CEO role, Hancock said she was confident of the current management team and the board of director's support of the executives.

"We have an excellent team that can take us through these next steps, and I feel very good about the team," Hancock said. "I believe that the board is very committed to supporting this team, yes."