) announced the acquisition of Seattle-based cloud service
provider Tier 3. The financial details of the deal remain
undisclosed. The acquired cloud platform from Tier 3 is now
branded as CenturyLink Cloud. We believe that the acquisition
will aid Century Link's growing business in cloud services and be
accretive to its enterprise business.
The news failed to influence the market and CenturyLink share
prices did not register any remarkable change onTuesday and
We expect the acquisition to be another step toward expanding
CenturyLink cloud base subsidiary business, Savvis, which has
contributed immensely in uplifting the performance level of the
former through its cloud computing and managed hosting solutions
for enterprises. In this regard, CenturyLink acquired
Platform-as-a-Service (PaaS) provider - AppFog Inc. This acquired
unit - which extends custom-made PaaS capabilities to software
developers and public cloud services through www.appfog.com -
will augment the product portfolio of Savvis.
We view this acquisition as a growth driver as AppFog's
high-quality Platform-as-a-Service offerings along with Savvis'
industry-leading infrastructure base will likely create a secure
and reliable network for developing applications in the cloud.
The company expects the new acquisition to complement
CenturyLink's earlier acquisition of AppFog and existing cloud
infrastructure including colocation, managed services and network
offerings. CenturyLink also extended its partnership with VMware
Inc. to introduce the vCloud Hybrid service in its North American
Savvis Data Center.
CenturyLink continues to expand data centers this year with a
view to generate higher revenues in collocation as well as
managed hosting and cloud services. The company is on track to
enlarge its global foothold with the expansion of data centers
and plans to add 87,000 square feet of space within 2013.
Considering the growing demand for services, the company
inaugurated two data centers - one each in Hong Kong and London.
Along with this, Savvis will expand other existing data centers
in eight cities, namely, Boston, Atlanta, Dallas, Piscataway,
Tampa, Washington, D.C., London and Singapore. With around 55
data centers spanning across North America, Europe and Asia,
management aims to capture more businesses by increasing its data
center wings in strategically suitable and secure locations,
boosting interconnectivity within the company's core
However, stiff competition from other low-cost telecom
LEAP Wireless International Inc.
), significant integration challenges as well as higher operating
expenses resulting from acquisitions may impede the company's
operating performance, going forward.
CenturyLink, which operates with carriers like
Frontier Communications Corporation
Telephone & Data Systems Inc.
), currently carries a Zacks Rank #3 (Hold).
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