Exodus Communications Pays Dearly for Lowering Guidance - TheStreet

(Updated from 3:52 p.m. ET)

Exodus indeed. Investors are fleeing

Exodus Communications


in droves, a day after the company took down its guidance for the current quarter.

Shares of Exodus fell 35.6% to $1.45 today, still well above the session low at $1.18, which also represents a 52-week bottom. As the trading day came to a close, more than 175 million shares of Exodus had been traded. From Jan. 1 through last night's close, Exodus investors traded an average of just under 14 million shares a day. In the last 30 days, about 16 million Exodus shares changed hands each day.

Aside from today's damage, the company's shares have been ailing for a long while. As of yesterday, Exodus has lost 95.6% in the past year, losing 88.6% of its value since the beginning of 2001. The stock shed 62.1% in the week prior to last night's close.

After the closing bell yesterday, the Web hosting company said it expects revenue of $315 million for the current quarter, about 13% lower than the previous guidance of $360 million. Exodus forecast a loss of $140 million, wider than the company's previous projection of a loss of $110 million to $115 million. That translates to a loss of 24 cents a share, wider than the prior guidance of a loss of 19 cents to 20 cents a share. According to

Thomson Financial/First Call

, analysts expect a loss of 21 cents.

"We are witnessing a continued weakness in market conditions beyond our previous projections," said

Dick Stoltz

, the company's financial chief, during a conference call last night. The company blamed the shortfall on a decline in orders from existing customers, as well as a decrease in the number of new installations. The company does expect earnings to rise slightly in the third quarter from the current second quarter.

In the company's statement last night, Exodus also said it would repay a $150 million loan under a senior credit agreement. In doing so, Exodus escapes the restrictions imposed on it through the loan.

At least eight analysts downgraded Exodus after the preannouncement, including

Salomon Smith Barney's

Stephen Mahedy. The analyst lowered Exodus to neutral from buy this morning, citing "concerns that the company faces potentially constant decelerating fundamentals going forward and liquidity issues as well." Mahedy also dropped his 12-month price target to $2, while

UBS Warburg's

John Hodulik reduced his price target on the stock to $3 from $15.

Stoltz also said on the conference call last night that he expects the company's cash balance to be cut nearly in half, to $550 million at the end of June, from $1.04 billion at the end of March.