Major Internet data center operator Verio Inc. has announced plans to close data centers and lay off staff as it tries to move towards profitability while coping with a slump in demand.
The company, which was acquired by Japan's NTT Communications Corp. (NTT-C) last year, plans to cut around 25 percent, or about 750, of its 3,000 workers as it closes offices and data centers. An NTT-C spokesman could not confirm how many of Verio's around 50 data centers would be closed although the restructuring will see this number reduced to around half, according to press reports in both Japan and the U.S.
Behind the closures and job cuts are massive losses chalked up last year, said Daniel O'Connor, a spokesman for NTT-C in Tokyo. He said Verio reported a net loss of US$777 million in the previous year on revenue of $328 million. Quoting sources at NTT-C, the Nihon Keizai Shimbun reported earlier this week that the company expects losses to hit $1.3 billion this year.
Verio expanded fast, adding capacity and data centers to match the explosive growth of the Internet industry in 1999 and 2000, but the bursting of the dot-com bubble led to a glut of server space in the hosting industry.