Pihana Pacific slashes 22 positions

By John Duchemin
Advertiser Staff Writer

Pihana, which had built a network of seven Internet data centers around the Pacific rim, has had trouble landing customers, company spokeswoman Linda Brock said yesterday. She blamed the problems on the post-Sept. 11 recession and the high-tech slowdown, which since early this year has confounded expectations for many high-tech service providers.

"The market is not as robust as we thought it would be," Brock said. "It's not a question of us losing business, it's just that large companies are not making decisions right now. The sales cycle is taking a long time."

The layoffs are a setback for a company that brought in $240 million in cash from venture investors late last year. Pihana spent more than $125 million to build data centers in Los Angeles, Sydney, Seoul, Tokyo, Hong Kong and Singapore to go with an earlier facility in Honolulu.

The company still has enough cash to get by, said company chief executive Rich Kalbrener.

"We're fully funded through 2003 even if we don't sell a damn thing through 2002," Kalbrener said. "We are closing some sales but, frankly, it's a little scary out there — how is the economy going to get better if no one's doing any business?"

Kalbrener said the layoffs are concentrated in the company's construction staff and center operations, where the company had staffed for growth that didn't materialize. The company has kept its sales staff intact, he said.

The layoffs represent about 10 percent of Pihana employees. The company now has about 180 workers.

Pihana is among many data center companies that have been forced to lay off employees — or worse — this year. The industry grew through 2000 as companies such as Exodus, Colo.com and iAsiaWorks envisioned a massive demand for huge high-security buildings where clients would park their computer systems and store data.

Investors poured in billions, but the forecasts proved too optimistic and the industry imploded, with many companies — including Exodus and Colo.com — going bankrupt.

Pihana opened its first data center near Honolulu International Airport in early 2000, but the 10,000-square-foot facility has attracted few customers.

Pihana's Los Angeles data center is slightly more than 30 percent full, Kalbrener said, and the center in Tokyo has about 30 percent occupancy — but most of the company's Asian centers are much less occupied, Kalbrener said.