Cable & Wireless Looks To Expand In U.S. With Exodus Deal Paying $580 Million For Assets It's a gamble for U.K. firm since analysts see a glut of Web-hosting facilities.(INTERNET & TECHNOLOGY)

Byline: REINHARDT KRAUSE

Cable & Wireless PLC is rolling the dice. It's wagering $580 million to get a bigger presence in the U.S.

That's how much the London-based phone company has agreed to pay for most assets of Exodus Communications Inc. Cable & Wireless will also assume $270 million of Exodus' debt.

A highflier during the dot-com boom, Exodus filed for bankruptcy protection in September.

Exodus provides Web hosting services to Internet firms and other companies. But it built too many costly data centers -- facilities where customers rent space to hook up computer servers to high-speed phone lines.

Cable & Wireless is gambling that Exodus can rebound despite an industrywide glut of data centers, analysts say.

"Fundamentally Web hosting is still a good business," said Saeed Baradar, analyst at Bear Stearns Inc. in London. "But the question is how much has Exodus' business deteriorated? How many customers has it lost?"