Savvis Inc., a subsidiary of
), is opening new data centers in Singapore and London, apart from
expanding its existing data centers in the U.S. The expansion
process in ongoing in regions like Santa Clara, CA, Washington,
D.C., Dallas and Weehawken, NJ.
Savvis has also recently launched Savvis Symphony Virtual
Private Data Center (VPDC) cloud services in select regions like
Canada. Symphony VPDC is a type of cloud solution that allows users
to create customized data centers with predefined service levels
for multiple customers under the same public cloud.
As a result, VPDC not only increases data security level but
also provides control over usage levels with no long-term
commitments, thereby leading to cost reduction. Savvis operates
through more than 50 data centers worldwide with a Tier 1
application transport network. This enables the worldwide
availability of Savvis cloud solutions that can connect with other
public or private data-centers and networks options.
With the acquisition of Savvis last year, CenturyLink remains
well positioned to gain from the cloud computing business, which is
growing by leaps and bounds. The acquisition strengthens
CenturyLink's footprint in the hosting managed cloud services
business in North America, Europe and Asia.
Apart from expanding its cloud computing business, CenturyLink
is also working on a number of initiatives to increase
profitability. The company is bundling integrated services,
promoting new services such as video, gaining new wireless spectrum
from the Federal Communications Commission (FCC) and improving its
infrastructure. This should work in favor of CenturyLink's future
revenue and earnings.
However, we believe that the company's acquisition strategy to
expand in new markets has weighed on its operating cost and debt
position, restricting earnings growth. Further, CenturyLink
faces intense competition from two major rivals,
Verizon Communications Inc.
We have a long-term Neutral recommendation on CenturyLink. For
the short term (1-3 months), CenturyLink retains a Zacks #3 Rank
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