Savvis Extends Deal with Thomson Reuters

Savvis Communications (SVVS) will continue to provide managed hosting and network services for Thomson Reuters, which has signed a three-year extension of its master services agreement, the companies announced today. Savvis’ relationship with Reuters has been of interest to securities analysts following the media company’s acquisition last year by Thomson.

At the time of the merger, Reuters was a $50 million contract for Savvis. Thomson Reuters announced a one-year extension with Savvis in June 2008, and today’s renewal adds another three years.

“Thomson Reuters has a longstanding relationship with Savvis and this newly extended agreement allows us to continue to create exciting new opportunities for customers worldwide,” said Bill Fathers, Savvis Senior Vice President, and Managing Director U.S. “As an important provider of IT infrastructure to Thomson Reuters across three continents, we are committed to delivering best-in-class solutions to its growing customer base.”

Savvis Shares Soar on Improved Earnings

Source: Savvis Inc.

Shares of Savvis Inc. (SVVS) were sharply higher Wednesday after the managed hosting specialist raised its financial guidance for Wall Street on several key metrics, saying its free cash flow and EBITDA would be stronger than the company’s previous estimates. The improved outlook was announced as Savvis posted solid earnings, adding a major new customer as several large accounts departed.

On Wall Street, Savvis shares gained $2.61 to $11.59 a share, a one-day gain of 29 percent. The company raised its guidance on 2009 free cash flow by $5 million to a range of $20 million to $35 million, while also boosting its projected EBITDA by $5 million to a range of $190 million to $200 million.

CEO Phil Koen said the company’s focus on managed hosting is paying off, citing improved bottom-line financial performance. Savvis executives said their numbers are likely to improve further as they fill space in a Chicago data center recently vacated by a large customer paying below-market rates.

Inside A Savvis Financial Data Center

Much of Wall Street’s trading is executed in microseconds, powered by low-latency electronic trading platforms housed in some of the world’s most connected data centers. Wall Street & Technology recently offered a glimpse inside one of these facilities with a photo gallery of a Savvis Inc. data center that houses the company’s Proximity Trading operation in the New York market. The building houses servers for five major exchanges, including the American Stock Exchange, Philadelphia Stock Exchange, and BATS Trading.

The Savvis data center features tight security, including an array of access restrictions using passkeys and several types of biometrics (including hand scanners and facial recognition). It also features one of the coolest man-traps we’ve seen, a glass security portal (pictured at left) controlled by a biometric scanner, complete with a weight sensor that can detect if a visitor’s weight changes while they are in the data center, indicating an attempt to remove equipment. Check out the photo gallery for more.

Savvis Sees Planets Aligning for Cloud

Bryan Doerr has been having lots of discussions with enterporise IT managers about cloud computing. Doerr, the chief technology officer for managed hosting specialist Savvis Inc. (SVVS), says the notion that enterprises are nervous about cloud computing is overblown.

“What we are increasingly hearing is that customers really liked the flexibility and purchasing model (for cloud computing),” said Doerr. “We feel very good from our customer conversations that uptake of these services will be good.”

Doerr spoke with us about reaction to Savvis Cloud Compute, a new service that moves its utility computing service into the cloud, providing enterprise customers more flexibility in how they provision, manage and pay for services running in Savvis data centers. Central to the new offering is an improved customer portal that gives users more control in provisioning virtual compute and storage capabilities.

Savvis Unveils Cloud Compute Service

Managed hosting specialist Savvis, Inc.(SVVS) today unveiled Savvis Cloud Compute, a new service that moves its utility computing service into the cloud, providing enterprise customers more flexibility in how they provision, manage and pay for services running in Savvis data centers.

Central to the new offering is an improved customer portal that gives users more control in provisioning virtual compute and storage capabilities, and the ability to purchase fractional compute resources on demand by the instance with flexible month-to-month business terms.

The new offering positions Savvis to compete in the emerging market for enterprise cloud computing, porting its existing utility computing operation to a cloud delivery and billing model.  

“Utility computing was the forerunner for what evolved into the enterprise cloud computing solutions we are seeing today,” said Bryan Doerr, Savvis Chief Technology Officer. “Savvis pioneered virtualized IT services in the network and the data center and is proud to continue expanding these capabilities with cloud-based IT infrastructure as a service. 

Strong Colocation Growth Boosts Savvis

The colocation market continues its strong performance, but growth in managed hosting is much harder to predict, according to Savvis Inc. The IT infrastructure specialist reported results that met Wall Street’s expectations, but sees challenges in 2009 as a key contract draws to a close and prospects in its key managed hosting business remain difficult to predict.

Savvis reported earnings of 6 cents per share this morning, while analysts had been expecting a loss of 5 cents a share. Shares of Savvis (SVVS) rose 8 percent in morning trading, gaining 53 cents to $6.93 a share. But company executives said they were cautious about the coming year.    

“In 2009, we expect to face a difficult economic environment and, as a result, have factored a cautious view into our guidance,” said Jeff Von Deylen, chief financial officer of Savvis. “We expect our network business to remain under pressure, modest hosting growth, industry-wide IT spending to be down for the year, and that the sales cycle will remain elongated.”

Savvis’ contract with the American Stock Exchange, which generated $27 million in revenue in 20087, is expected to end when the AMEX consolidates its IT operations with NYSE Euronext this year. On the upside, Savvis sees opportunities in cloud computing, and will launch a cloud platform in the first quarter of 2009.

The company is also assessing the impact of the economic crisis, particularly for customers in the financial industry, which account for 20 percent of Savvis’ revenue. CEO Phil Koen said Savvis has seen increased inquiries for managed hosting services during the past 30 days, suggesting that enterprise customers are weighing new approaches to their data center infrastructure.

Savvis in Cloud Testing Alliance

Is application testing the on ramp for cloud computing? Savvis Inc. sees testing as key step towards broader adoption of on-demand computing, and has allied with SOASTA to provide a testing service for cloud applications. The alliance will allow Savvis to offer customers a “virtual test lab” as part of its new software as a service (SaaS)  hosting platform and enablement services.

 SOASTA offers its testing environment as an on-demand service or as a hardware appliance, so Savvis customers preferring to test inside the firewall can use SOASTA to test locally and then deploy on Savvis’ platform.

”Cloud testing is a great entry point for companies looking to move into the Cloud as it replicates real world scenarios without the issues associated with production,” said Tom Lounibos, CEO of SOASTA. “In this time of economic uncertainty, companies are looking to reduce costs at every level. Internal test labs have long been money pits. Cloud testing not only reduces the cost of testing by about 60 percent but also provides better quality testing to ensure more reliable production applications.”

Roundup: Savvis, Velocix, Rackable, GE

There’s been a lot of data center news this week. Here are several noteworthy items:

• Savvis Inc. (SVVS) has refinanced its revolving credit facility, the company said late Monday. The new facility is slightly smaller, shrinking from $85 to $50 million, but includes an “accordion” ferature that will allow it to expand to $100 million if Savvis meets financial benchmarks. Savvis has accessed the new facility for $24 million in letters of credit.
• Content delivery specialist Velocix has launched a service offering ISPs the ability to build their own CDN for video and rich media. Velocix Metro is the name of the new offering, which was recently deployed at Verizon (VRZN) , which is using the technology to offer content providers exclusive access to their subscribers. Dan Rayburn and Contentinople have more.
• Rackable Systems (RACK) has introduced the C1002 server, which uses energy efficient chips from AMD and Intel. “Customers will achieve greater storage capacities with the C1002 and attain dual server densities in 1U of rack space to lower the total cost of ownership and increase their organization’s ability to cost-effectively scale,” said Giovanni Coglitore, chief technology officer at Rackable. 
• GE Digital Energy announced the availability of its new Zenith 1600-3000 Amp Horizontal Bypass/Isolation Automatic Transfer Switch (ATS) system - an easy to operate, compact ATS that enables safe, simple maintenance and inspection. “We are addressing the challenges facility managers face on a daily basis by delivering an easy to operate and easy to maintain bypass/isolation design that ultimately helps ensure critical load uptime and operator safety,” said Steve Smith, General Manager – Power Quality, GE Digital Energy. “This new system is a breakthrough in the installation and operation of Bypass/Isolation ATS.”
• Rightscale, which provide management tools for cloud computing applications, has raised $13 million in a second round of venture capital funding, the company said. It previously raised $4.5 million in April.