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Ethernet Demand Revives Yipes

Light Reading
News Analysis
Light Reading
4/27/2005

The news that CenturyTel Inc.'s (NYSE: CTL) looking to offer Ethernet services using acquired fiber assets points to a growing trend: the revival of old networks to capitalize on demand and the resurgence of companies like early pioneer Yipes Enterprise Services Inc. and Viatel Holding (Bermuda) Ltd. (OTC: VTLAF). (See CenturyTel Eats Up Ethernet , Yipes Raises $24M in C Round, and Viatel Rises Again.)

Yipes, which announced its third round of funding earlier this month, acquired the assets of Yipes Communications Inc. several years ago and after a period of “stabilizing” the company, is on the lookout for further acquisitions to expand its network. Stepping up its activity of late, Yipes says it has doubled its number of customers to 600 in the past year.

“We view this as a critical time for the industry,” says Keao Caindec, VP of marketing, citing the rapidly growing demand for Ethernet as an opportunity for both new services and “inorganic growth." The plan to go shopping for companies and/or assets "is why we got in excess of what we needed” from the funding round.

Existing investors Norwest Venture Partners, JPMorgan Partners, and Sprout Group ponied up the cash, along with lead investor Crosslink Capital, taking the total to $94 million since 2002. Yipes expects profit from recurring operations this year and positive cash flow in 2006.

Like CenturyTel, Yipes offers metro services in both point-to-point (E-Line) and multipoint (E-LAN) configurations. The U.S. metros are also linked, to provide wide-area services in 12 states (Directory: ). It has recently added a point of presence in the U.K., and Caindec says it intends to extend its reach to Tokyo, Hong Kong, Singapore, and possibly Mexico.

The large firms the carrier targets tend to have offices in “the major international cities,” so expanding to provide service in those locations is “an important step for us,” says Caindec. Customers include financial companies linking to trading platforms, multi-site healthcare organizations using data storage, and law firms connecting multiple offices and accessing Lexis Nexis. “The applications are really what’s driving this.”

Such developments tack on a rather upbeat chapter to the Yipes story, which has had its share of intrigue (see Yipes Switches CEO Again, Yipes Rides Back With $63.5M, Yipes Reborn – Amid Accusations, Yipes's Parrick Gets the Boot, and Yipes Joins Chapter 11 Club).

Yipes replaced its CEO (again) in September last year, appointing former Internap exec John Scanlon, to provide a new growth strategy as the Ethernet market heats up (see Yipes Intros Channel Partner Program). "It's not just early adopters anymore," says Caindec. "The market today is definitely mainstream."

— Nicole Willing, Reporter, Light Reading




CALLING ALL ETHERNET SERVICE PROVIDERS:
Make sure your company and services are listed free of charge in Light Reading's Ethernet Services Directory, which already lists hundreds of services, by completing this questionnaire.

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