Savvis Ready to Build, and May Go Shopping

savvis-colo-fill

This graphic from the Savvis earning release shows the revenue-to-floor space impact of its managed hosting offering (left), as well a a shift in its colo customer base (at right).

Savvis (SVVS) is in building mode, and may be going shopping as well. The managed hosting provider plans to build additional data center space in the northern Virginia and London markets, in addition to the expansion announced today in Chicago. The company estimates that it will spend about $55 million on its current data center projects, which also includes an expansion in Weehwaken, New Jersey.

Savvis also detailed improving results in its cloud computing operation, and predicted further growth ahead as companies shift to a pay-as-you-go model..

Savvis executives said the company is also "selectively exploring expansion opportunities" that would increase the company's geographic data center footprint or service offerings. Interim CEO Jim Ousley said the company sees good growth prospects in Europe and Asia. Savvis said it is contemplating data center expansions in Hong Kong and Sydney, but has not yet included that in its capital expenditures as yet. 

Savvis reported a net loss for the fourth quarter of $5.4 million (10 cents a share) on revenue of $219.8 million. Analysts were expecting a loss of 17 cents a share, on revenue of $215.4 million, according to Thomson Reuters. Savvis' revenue was boosted by an early termination fee of $2.2 million from a managed hosting customer.

The company is planning to add 6,000 square feet of space to its DC4 data center in Sterling, Virginia, which currently houses about 30,000 square feet of raised floor. Savvis' largest expansion will be in Slough, England, where it will build out an additional floor in an existing facility, adding 22,000 square feet of space in the greater London market.

"This expansion is very much demand-driven," said Bill Fathers, the global head of sales and marketing for Savvis. "There's a definitely an improvement in demand, especially from the financial sector."

Savvis also outlined progress on its suite of cloud computing products, which will now be combined under the Savvis Symphony brand. Savvis reported cloud computing revenue of $7.4 million for 2009, up 93 percent year-over-year, and fourth quarter revenue of $2.5 million. A third of the companies' cloud deals involve new customers, according to CTO Bryan Doerr.   

Savvis said the growth of its cloud computing business was helping stabilize revenue in its network services business, where revenues had been trending lower. "We do see a high pull-through rate," said Fathers. "When we sell cloud hosting, they usually want network services as well."