Savvis Inc's (NASDAQ: SVVS) business continues to improve, supporting the view that the data center business is a real business. As we have blogged about Savvis and Equinix Inc (NASDAQ: EQIX) in the past, these are two pure-play data center companies that were able to restructure their balance sheets in the post-tech & telecom bubble of the late 1990s. Here are some of the numbers for Savvis:- Savvis revenue jumped 15%, with adjusted EBITDA jumping 55% to $123 million
- Revenue continued to shift to higher-end product lines, moving up the value chain to managed VPN and hosting services
- EBITDA for the fourth quarter jumped 67%
- Savvis was able to sell a subsidiary for $125 million which can be used to expand its core hosting businesses
For example, managed hosting generates $4 versus every $1 dollar earned for a commodity hosting business. In addition, for new services that Savvis will be able to sell to customers in 2008 on its upgraded infrastructure, that number goes up to $8 for every dollar of commodity services.
Savvis said by increasing co-location space and moving up the value chain, it can easily drive hosting revenue above $ 1 billion. High-end hosting and managed services is a real growth business. Stay focused on both Savvis and Equinix.
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Reader Comments (Page 1 of 1)
1-30-2007 @ 9:31PM
Rich Miller said...
If you think there was any doubt about whether "the data center business is a real business," then you ought to look at the performance of the major data center companies during 2006. They outperformed the market by a huge factor:
http://www.datacenterknowledge.com/archives/2007/Jan/02/2006_huge_year_for_data_center_stocks.html