Krause Replaces Hancock as Exodus CEO

Exodus Communications Inc. Chief Executive Ellen Hancock unexpectedly quit Tuesday, signaling more turbulence at the financially strapped Web-hosting firm.

The company named William Krause, former chairman of 3Com Corp. and current president of LWK Ventures, a private investment firm, as the new chairman and chief executive.

Though it provides services to major companies such as Yahoo Inc. and EBay, Exodus was hard hit as its dot-com customer base folded and revenue shrunk as it built out a network of 40 data centers.

So far, the company has endured multiple layoffs, a 98% drop in its stock price and a staggering $3 billion in debt. Exodus said it would consider serious merger or takeover offers.

Hancock widely was seen as one of the rising stars of Silicon Valley, even after being dismissed from IBM Corp. in 1995 after 29 years with Big Blue and by Apple Computer Corp. in 1997 after serving as chief technology officer.

“During Ellen’s tenure, Exodus enjoyed phenomenal growth and was able to build a world-class data center infrastructure and managed services offerings, benefiting greatly from her technology expertise,” Krause said. “The focus now is to implement an operating plan that reflects the realities of a tough economic environment.”

No reason was given for her resignation, and phone calls left with an Exodus spokeswoman were not immediately returned.

Her departure marks the most recent exodus from the company. Last month, three board members abruptly quit, reportedly after losing a debate over the future of the company. Exodus also replaced its chief financial officer in July.

Shares of Santa Clara, Calif.-based Exodus fell 21 cents, or more than 24%, to 67 cents on Nasdaq.