Savvis Inc., subsidiary of one of the leading telecom and data
solution providers in the U.S.,
) has launched subscription-based hosting services for
) HANA platform, which is a enterprise data product
SAP HANA is a real-time database platform that streamlines
analytics and planning for smoother business operations at the
enterprise group.The product when accessed through Savvis'
hosting services will reduce costs through the use of lesser
expensive server hardware while operating systems and application
We believe that CenturyLink is gaining significant momentum in
the enterprise market with the introduction of Savvis' product
lines. The acquisition of Savvis in 2011 has not only resulted in
revenue accretion but has also expanded CenturyLink's reach
beyond the conventional core local phone business.
Over the years, CenturyLink's phone business has experienced
persistent declines. This is evident from the continued decline
in its access lines on an organic basis. The reason behind this
is the displacement of traditional wireline telephone services by
wireless and other competitive offerings. Further, soft economic
conditions in the company's service territory also continue to
contribute to the weakness.
Although the company is working on a number of initiatives to
curtail access line losses, it remains far from realizing much of
the benefits that would support business growth. Meanwhile, the
company has gained from industry consolidation through profitable
acquisitions like Savvis.
With Savvis, CenturyLink entered into the cloud computing
business, which is growing by leaps and bounds. CenturyLink has
expanded its footprint in the hosting managed cloud services
business to 50 data centers in North America, Europe and Asia.
The company continues to expand data centers this year with an
aim to generate revenue growth in managed hosting and cloud
services. These acquisitions bequeathed several benefits like
greater scale of operations and increased productivity, apart
from providing the company with a competitive edge over larger
telecom carriers like
Verizon Communications Inc.
However, stiff competition and increased operating expenses due
to the acquisitions may impede the company's growth
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CenturyLink retains a Zacks Rank #3, implying a short-term (1-3
months) Hold rating.