Fonseca previously served as chief operating officer of Terremark, and as president of Terremark’s U.S. Public Sector business unit where his duties included overseeing Terremark’s federal business, as well as the company’s state and local government initiatives and its NAP of the Capital Region campus in Culpeper, Virginia.

“When Verizon initially acquired Terremark, one of the main drivers was the outstanding leadership team that was in place, and Nelson will continue to be an invaluable asset for the company,” said Bob Toohey, Verizon Enterprise’s COO. “Nelson is a dynamic leader that will continue to drive Verizon’s global cloud strategy and deliver the enterprise-class IT infrastructure solutions that large companies and government agencies require today.”

The Terremark NAP West data center in Santa Clara, Calif.

Santa Clara, Calif. continues to be a hotbed of data center activity. Today Terremark said it has completed an expansion of its Network Access Point (NAP) West data center in Santa Clara, which now features 100,000 square feet of raised floor space. Terremark, a Verizon company, said the expansion in Silicon Valley was driven by strong customer demand for enterprise-class IT services.

The project brings additional colocation capacity online in Santa Clara, which has seen a burst of data center construction this year. Data centers are attracted to Santa Clara by the price of electricity from municipal utility Silicon Valley Power, which is slightly less than pricing for PG&E in surrounding towns in Silicon Valley. Terremark is one of many data center providers bringing new space online, joining Digital Realty Trust, DuPont Fabros, CoreSite, Vantage Data Centers, QTS and Server Farm Realty.

“As a major interconnection point for the world and of the technology industry, the Silicon Valley area has long been a location of strategic importance for Terremark,” said Kerry Bailey, president of Terremark. “Through the expansion of the NAP West, we continue to invest in the strategic global hubs that support the requirements of our expanding global customer base.”

Terremark was acquired by Verizon earlier this year in a $1.4 billion deal . It recently opened the NAP of Amsterdam, the flagship hosting facility for Verizon/Terremark’s European cloud operations, and expanded the NAP do Brasil in Sao Paulo.

Terremark said the expansion of the NAP West was designed to meet the demands for data-intensive colocation and cloud hosting space in Silicon Valley.

“Our newly expanded data center campus meets the needs of power, space and bandwidth-intensive applications we are seeing in today’s market,” said Hector Hernandez, senior vice president of data center operations for Terremark. “We designed and built NAP West to meet our high security standards with added redundancy to maintain our customer’s mission-critical applications around the clock.”

An aerial view of the new Terremark NAP of Amsterdam, the company's latest network access point.

Amsterdam is one of Europe’s key Internet intersections, with hundreds of companies connecting their networks in the city’s data centers. Today there’s one more interconnection site, as Terremark ( a Verizon Company) announced the opening of the Network Access Point (NAP) of Amsterdam. The NAP of Amsterdam will serve as the flagship facility for Terremark’s network of more than 10 data centers across Europe.

The new facility provides 25,000 square feet of data center space inside the Amsterdam Airport Schiphol Area, which will help Terremark meet demand from European customers seeking advanced cloud computing and IT infrastructure services. The NAP of Amsterdam is directly connected to AMS-IX, one of the world’s largest Internet exchanges with more than 350 members. Through the presence of AMS-IX, Terremark’s enterprise and government customers can leverage the hundreds of global networks while reducing latency and controlling transit costs.

“Important Milestone” for Verizon

“The opening of the NAP of Amsterdam represents an important milestone in Verizon’s continued strategic investment in expanding Terremark’s global data center footprint,” said Kerry Bailey, president of Terremark. “The expanded portfolio of facilities and services that we are bringing to market enables our customers throughout Europe to tap into a highly differentiated set of enterprise-class services that meet our high requirements for security, performance and reliability in the industry.”

The NAP of Amsterdam expands the company’s presence in Europe, adding to key sites in Spain, the United Kingdom and Turkey. “Amsterdam is an established central business hub for more than 500 international companies, and we are uniquely positioned to tap this market,” said Herman Oggel, president of Terremark’s European business unit. “The NAP of Amsterdam will enhance our ability to provide the secure and highly sophisticated solutions customers have come to expect from us.”

The IBM Watson supercomputer will help WellPoint launch patient care applications.

Here’s our review of noteworthy health care links for the data center industry:

IBM and WellPoint put Watson to work. IBM and WellPoint (WLP) announced an agreement today to create the first commercial applications of the IBM Watson technology. Earlier this year IBM’s Watson supercomputer defeated top Jeopardy champions in a three day match. Now Watson will be used to develop and launch solutions to help improve patient care through the delivery of up-to-date, evidence-based health care for millions of Americans. IBM will develop the base Watson healthcare technology on which WellPoint’s solution will run. Well-suited for health care, Watson can sift through an equivalent of about 1 million books or roughly 200 million pages of data, and analyze this information and provide precise responses in less than three seconds. IBM will develop Watson to have the ability to look at massive amounts of medical literature, population health data, and even a patient’s health record, in compliance with applicable privacy and security laws, to answer profoundly complex questions. “Imagine having the ability to take in all the information around a patient’s medical care — symptoms, findings, patient interviews and diagnostic studies,” ” said Sam Nussbaum, M.D., WellPoint’s Chief Medical Officer. “Then, imagine using Watson analytic capabilities to consider all of the prior cases, the state-of-the-art clinical knowledge in the medical literature and clinical best practices to help a physician advance a diagnosis and guide a course of treatment.”

Terremark selected by CareCloud.  Terremark, a Verizon Company, announced that it is enabling CareCloud, a healthcare management solutions provider, to successfully grow its business and help modernize hundreds of health care practices across the United States via the cloud. Delivered through the Software as a Service model CareCloud addresses common challenges such as practice management, electronic health records and revenue cycle management. Using the Terremark Infrastructure as a Service solution CareCloud can grow from start-up to an established leader by using the flexible solution that gives them the same resources as large enterprises. ”Terremark’s portfolio of secure infrastructure solutions is a natural fit to integrate into our platform,” said Albert Santalo, president and CEO of CareCloud. “As a cloud-based company that serves a growing network of healthcare businesses and partners, we require the kind of agile IT infrastructure platform with a dedicated resource pool for computing and storage, built-in security and stringent service level agreement terms that the Terremark’s cloud computing infrastructure provides.

Online Tech achieves HIPAA Compliance.  Online Tech announced that they have achieved compliance across all 54 HIPAA citations and the complete set of 136 audited components when audited by an independent Certified HIPAA Professional and Certified Health Security Specialist.  In addition to SAS70, SSAE 16 and SOC2 and SOC3 reports, Online Tech’s growing health care client base drove the additional compliance need to achieve HIPAA compliant hosting. “Being in healthcare, we have special needs for dealing with HIPAA compliance to provide business continuity, disaster recovery, security of the data, and restricting access to the data both physically and across the network,” explains Erik Yochum, Director of Information Technology at Online Tech customer Michigan Multispecialty Physicians. “Online Tech has different power, network, and connectivity feeds coming in so that they can provide different ways of accessing the data. So if we have a power outage, we have access to our data and systems for patient care.”

Consonus relocates large healthcare data center.  Consonus announced that they have completed a successful data center relocation for High Point Regional Health System (HPRHS), a large healthcare system in North Carolina. The move took place after months of meticulous planning to ensure that confidential patient data and business-critical systems were transferred safely, securely, and with minimal downtime. When the customer forecasted an annual growth rate of 15% for both servers and storage they realized that they could not accomodate those needs in the existing data center location. Using a DCIM (Data Center Infrastructure Management) tool Consonus was able to shorten planning by four months, saving HPRHS $60,000 in preparation and consulting time. “Consonus helped us through the entire process, defining the current environment and the desired future state, as well as helping design the path to migrate from one to the other. For each of the 8 move events, specific “day of move” plans were created jointly with application and infrastructure staff to ensure that everything happened as planned, in the timeframe needed, and with minimal disruption.” said Thomas Northrup, manager of Technology Infrastructure for HPRHS.

“Our main focus in expanding our Sao Paulo data center is to provide local customers with a secure, highly available hosting environment for their mission-critical applications,” said Hugo Zanon, general manager of Verizon’s Brazilian Terremark operations. “The NAP do Brasil offers our multinational customers a globally connected facility they can leverage as they deploy the IT resources needed to tap the growing Brazilian and Latin American markets.”

Brazil is a hot emerging market for IT infrastructure, which will be critical to supporting communications services for two global events being hosted by Brazil: the 2014 World Cup and 2016 Summer Olympics in Rio de Janeiro.

“Terremark is committed to offering customers leading-edge cloud computing and IT infrastructure solutions that are ideally suited to meet the needs of global companies that are expanding into emerging markets like Brazil,” said Rodolfo Garcia, head of Verizon’s Latin American Terremark operations. “Additionally, we are able to leverage our well-known managed security expertise to provide customers with a uniquely differentiated level of security for our cloud solutions.”

Terremark’s NAP do Brasil in Sao Paulo is home to a major Internet exchange point in Latin America with massive and diverse connectivity from the region’s largest carriers.

Terremark CEO Manuel Medina (inset) and the NAP of the Americas in Miami. Medina is stepping as CEO of Terremark.

After a decade building his company into a major player in cloud computing, Terremark CEO Manuel Medina said Thursday that he will step down on May 31. The CEO’s departure follows Terremark’s acquisition by Verizon in a $1.4 billion deal that capped his tenure and provided a major validation of Medina’s vision for the growth of the Internet.

“I’ve had the privilege to lead Terremark and our amazing team of professionals for more than 30 years and I feel that now is the perfect time to step aside and allow the next generation of leaders to build on the success we have achieved,” said Medina. “I truly believe that the collective strengths of Verizon and Terremark will propel the company to even greater heights in the years to come.”

Verizon Exec Takes Helm

Medina will be succeeded by Kerry Bailey, Group President of Enterprise Cloud Strategy and Services for Verizon. Bailey has held various executive positions within Verizon, most recently heading its “everything-as-a-service” enterprise solutions strategy.

“What initially attracted us to Terremark was not only its innovative services and top-tier facilities, but the impressive team of experienced and talented professionals that Manny was able to bring together,” said Bailey. “Terremark will drive Verizon’s global cloud and IT solutions strategy, and I’m looking forward to continuing our work to roll out an unmatched portfolio of secure, on-demand cloud computing solutions to be delivered through a unified enterprise IT platform.”

Medina founded Terremark with a vision for a data center that would make south Florida the gateway to Latin America for internet connectivity.  The company built The NAP of the America, one of the world’s largest data centers, just as the dot-com boom was receding. The facility opened just prior to the Sept. 11 terrorist attacks, which further disrupted the economy.

Medina persisted, guiding Terremark  through a period of financial challenges as it sought to manage the debt from building the NAP. The company survived a brutal downturn in the data center market, and was transformed by two key strategic moves in 2007: the decision to build the NAP of the Capital Region, and the acquisition of Data Return and its Infinistructure platform. These two events laid the foundation for the company’s success in the government and cloud computing sectors.

The $85 million Data Return deal marked a huge bet on the future of virtualized platforms, which paid off in a huge way in the years that followed. “We believe that virtualization will be one of those watershed moments in our industry,” Medina said at the time of the transaction. “There is an insatiable appetite for computing capacity, and I believe virtualization is the best way to add computing capacity.”

In a 2008 interview with Data Center Knowledge, Medina reflected on his journey as Terremark’s CEO through the difficult early years. “The industry was in crisis, but we were seeing the demand,” Medina recalled. “It was very difficult. Our philosophy was that if we fight for it long enough and survive, Wall Street would pay attention. We really believed the explosion of the Internet would catch up. It’s been an extremely gratifying turn of events.”

An aerial view of the NAP of the Capital Region, showing both completed data center buildings at the Terremark campus.

Verizon Communications (VZ) has closed its $1.4 billion acquisition of Terremark Worldwide, clearing the way for Verizon to lead the rapidly evolving global managed IT infrastructure and cloud services market, the company said today.

The acquisition was completed via a short-form merger under Delaware law, meaning no Terremark shareholder vote was required. Terremark will operate as a wholly owned subsidiary of Verizon. All outstanding Terremark shares were not tendered already were converted into the right to receive $19 per share in cash without interest, the same consideration paid to stockholders in the tender offer. With the closing of the deal, Terremark’s common stock (TMRK) will cease trading on NASDAQ.

Terremark, which will continue to be based in Miami, will help fuel overall Verizon growth by accelerating the company’s strategy to provide “everything-as-a-service” to business and government customers globally.

“There is a fundamental shift under way in how enterprises consume IT resources, and concluding this transaction is a turning point in Verizon’s push to provide integrated, enterprise-class cloud solutions and accelerate growth in this important segment,” said Robert Toohey, president of Verizon Business. “In the coming months, we’ll leverage our collective strengths to roll out a differentiated portfolio of secure, on-demand cloud computing solutions to be delivered through a unified enterprise IT platform.”

Verizon said the acquisition will accelerate its “everything-as-a-service” cloud computing strategy by adding a portfolio of secure, scalable cloud solutions, along with Terremark’s large base of business and government customers. Verizon also gets Terremark’s global network of 13 data centers,  including the NAP of the Americas in Miami, the NAP of the Capital Region data fortress in Culpeper, Virginia and facilities in Silicon Valley, Dallas, Amsterdam and Sao Paulo, Brazil.

Terremark launched in 2000 by building one of the world’s largest data centers, the 750,000 square foot NAP of the Americas. The company survived a brutal downturn in the data center market, and was transformed by two key strategic moves in 2007: the decision to build the Virginia complex, and the acquisition of Data Return and its Infinistructure platform. These two events laid the foundation for the company’s success in the government and cloud computing sectors.

New Pricing for Terremark vCloud Express.  Terremark (TMRK) announced the addition of new levels of support and an innovative new storage pricing model for users of its vCloud Express offering. The company also updated its pricing model for virtual machines leveraging large amounts of memory, processing and storage resources. Price adjustments on vCloud Express account for peak storage capacity utilized over the course of a month, instead of being charged for the total disk space deployed. “The thousands of users that leverage the secure, reliable, and cost-effective computing resources offered by Terremark’s vCloud Express are consistently delivering the innovation and value that allow their private or public-sector organizations to succeed in today’s rapidly evolving environment,” said Chris Drumgoole, Terremark’s Senior Vice President of Client Services. “We believe these updates will serve to extend the leading-edge nature of our service and enhance our position in this highly competitive market.”  Modified price structures are retroactively effective as of April 1.

Alcatel-Lucent enters data center switch market. Alcatel-Lucent (ALU) announced its new data center switching solution blueprint for enterprises. The unique solution delivers ‘mesh’ and ‘pod’ architectural designs.  The ‘mesh’ architecture is a switching fabric that can combine over 14,000 server 10Gig ports with only two core switches, with end-to-end latency of less than five microseconds.  The ‘pod’ architecture addresses server-to-server traffic and cost reduction with the highly dense, stackable OmniSwitch 6900 solution as a top-of-rack switch. The new Alcatel-Lucent OmniVista 2500 Virtual Machine Manager (VMM), a part of the OmniVista Network Management System, addresses network management constraints related to application virtualization and virtual machine mobility in the data center as well as provides tracking and visibility. “As we build on our Application Fluent Network vision, our new data center switching solution is empowering enterprises to set up a virtualized network for their data centers, allowing users to easily take advantage of real-time applications from any location across any device,” said Michel Emelianoff, Vice President and General Manager of Alcatel-Lucent Enterprise Networks.

Akamai delivers March Madness On Demand.  Akamai Technologies (AKAM) announced that the Akamai HD Network was the exclusive video delivery platform for the 2011 NCAA March Madness on Demand (MMOD) coverage of the NCAA Division I Men’s Basketball Championship provided by Turner Sports and CBS Sports. Akamai’s HD network delivered all 67 games online, with more than 1.9 million unique visitors per day on broadband sites and more than 680,000 daily visitors on mobile applications.  “Working with Turner Sports and CBS Sports on their enhanced, innovative online features, including free video content across broadband and mobile devices, was a slam dunk for all involved,” said Robert Hughes, Executive Vice President of Global Sales, Services and Marketing at Akamai. “By leveraging Akamai’s HD Network, Turner was able to offer higher bit rates across broadband and mobile devices, which helped contribute to longer viewing times, more multi-game watching and more user engagement.”

Interxion customer wins.  Interxion (INXN) announced an agreement with Quod Financial, a global provider of adaptive trading technology, to locate its servers in Interxion’s City of London data center. Also announced was an agreement with ICF Systems AG, a full-service IT provider for the financial industry, to build a point of presence for ICF’s managed trading services at Interxion’s Frankfurt data center campus. ICF Systems AG is one of the first customers to take advantage of Interxion’s multi-member access service that was launched recently. “Interxion’s scalable Frankfurt data centre campus is the perfect location for us to deliver our services from,” said Michael Krug, CEO of ICF Systems. “We intend to migrate our customers to the Interxion platform to allow them to benefit from the quality and flexibility provided by the architecture of Interxion’s multi-member access service. The existing community of financial services firms already at Interxion provides us with an additional revenue opportunity, whilst the choice of more than 150 communication networks, means both ICF Systems and our customers can source the best connectivity solutions available.”

Terremark reported total revenues of $94.3 million and adjusted EBITDA of $28.5 million for the quarter for year-over-year increases of 27 percent and 44 percent, respectively. Terremark also reported another quarter of strong bookings, with $30.9 million of new annual contract value added to backlog. During Q3, Terremark added 46 new customers, for a total of 1,422 customers at the end of the period.

The company posted a net loss of $15 million, or 23 cents per share, compared with a loss of $8.3 million, or 13 cents per share, in the same period a year earlier. It must be noted, however, that a change in fair value of derivatives had a negative 6.5 million impact in the quarter.

Terremark increased its guidance for fiscal 2011, with revenues now expected to range from $352 million to $355 million and EBITDA, as adjusted, to range from $100.0 million to $102.0 million. The company also issued guidance for fiscal 2012. Terremark expects revenues between $445 million and $455 million and EBITDA, as adjusted, to range from $145 million to $150 million.

Using this forecast to evaluate Verizon’s acquisition, it appears that Terremark’s total equity was paid more than three times next year’s expected revenues, and about 9.5 times adjusted EBITDA.

In December, Terremark was positioned by Gartner, Inc. in the leaders quadrant in its Magic Quadrant for Cloud Infrastructure as a Service and Web Hosting.

A quick look at Gartner’s Magic Quadrant is interesting, as it shows that both Verizon, Terremark and Navisite, recently acquired by Time Warner Cable, appear in this research among the best companies. If we further exclude AT&T, the remaining players in the leaders’ section are SAVVIS and Rackspace, who are also among the listed companies that mostly benefited from this cloud computing acquisition binge.

Back to Terremark’s Q3 performance, it should be noted that colocation was the main growth driver, with a 15% increase on a quarterly base (click to enlarge):

Click for larger image (Source:Terremark)

These numbers obviously bode well as most colocation companies are expected to report their Q4 revenues this coming week.

The Federal side of the business is also growing smoothly at Terremark, having reached about 23 % of revenues in the latest quarter:

Source: Terremark

During the conference call held to discuss the Terremark acquisition, Lowell McAdam, Verizon’s President & COO, clearly indicated the reasons for this move:

“This transaction will accelerate Verizon’s everything-as-a-service cloud strategy by delivering a powerful portfolio of highly-secure, scalable on-demand solutions to business and government customers across the globe,” said McAdam. “As we looked at how best to position ourselves for opportunities in this market, it became increasingly clear to us that a purely organic build would not get us into this rapidly evolving market as fast as we wanted. At the same time, it became clear as we worked cooperatively with Terremark on other joint commercial activities, that they would bring as much of what we needed and accelerate us on a path to leadership in cloud services.”

Some analysts, however, noted that Terremark’s revenues from its cloud offering remain relatively small. In Q3, as shown in the following chart, the company reported revenues of about $9.4 million, or just 10 percent, from this key vertical (the sheet reports numbers in term of annualized run-rate). While these numbers are growing quickly, there is obviously more to the acquisition than just the potential of the cloud offering, with Terremark representing a strategic hub for the South American market, a strategic partner for the U.S. Government, and a data center specialist who can also help Verizon manage its colocation offering around the world.

Verizon (VZ) said yesterday that it will buy Terremark (TMRK) for $19 a share as a way to accelerate its “everything-as-a-service” cloud computing strategy. The deal is driven by Terremark’s progress in managed services and cloud computing, but Verizon said it also valued the colocation business. That point was emphasized by executives of both companies in a conference call this morning.

Terremark an Independent Subsidiary
“We have very specifically set Terremark up as a wholly-owned subsidiary, and Manny and his team will be independent,” said Lowell McAdam, president and chief operating officer of Verizon. “We’re not going to try to cramp their style at all. There will be no moves to take certain customers out of play.”

“Our business model is not changing,” said Terremark CEO Manuel Medina. “Our carrier-neutral colocation business will continue as is.”

How will this play? The carrier hotel industry was born out of unhappiness with incumbent telcos and challenges in deploying equipment in central offices. After the Telecom Act of 1996 opened the U.S. phone market to competitive carriers, incumbent phone companies were directed to provide their new rivals with access to central offices to house equipment and make connections.

The new carriers were largely unhappy with the arrangement, and soon began leasing space for their equipment in sturdy buildings located next to telco central offices. This strategy provided easy access to telco networks, but with the additional control and space they desired. Carriers and data center providers quickly filled buildings like 60 Hudson Street in New York, One Wilshire in Los Angeles, 350 East Cermak in Chicago and 401 North Broad Street in Philadelphia.

Terremark’s NAP of the Americas in Miami was the first effort to build a major Internet exchange from the ground up, as a dedicated data center building. More than 160 global carriers exchange data at the huge, 750,000 square foot building, which is a key Internet gateway to Latin America.

Will those carriers be comfortable with Verizon as their landlord – even if Terremark continues to manage the property? Despite the assurances that Terremark will remain carrier-neutral, securities analysts wondered whether the deal might lead to the loss of revenue from customers who remain unconvinced and depart.

“From a carrier-neutral perspective, we don’t think (customer loss) is a big risk,” said Fran Shammo, Verizon’s Chief Financial Officer.

What do you think? Will it remain business as usual? Share your thoughts in the comments.