Savvis Inc., a subsidiary of CenturyLink, Inc. (CTL), has recently unveiled its latest technological addition, Symphony Cloud Storage. This new product is a cloud based platform that offers unlimited date storage solution and accessibility across the globe.
The cloud product has initially been launched in data centers in London, Singapore, Toronto, Washington, D.C and California. The service is currently available to selected Savvis clients, but will be commercially accessible by early 2013.
The global market for cloud computing is on the rise and steadily making a dominant position on the information technology front. According to market reports, the global market of cloud is moving at a cumulative growth rate of 30% and expected to hit $270 billion by 2020. As a result, most of the technological companies including telecommunications are considering it as a potential future opportunity.
For carriers like CenturyLink, entering cloud marklet does not only mean expanding its service portfolio but also extending its reach beyond its domestic markets. 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 resulted in revenue accretion and also expanded CenturyLink’s services beyond conventional market of core local phone business.
CenturyLink currently 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 higher revenue growth in managed hosting and cloud services.
However, stiff competition from other low cost telecom operators like LEAP Wireless International Inc. (LEAP) and increased operating expenses resulting from the acquisitions may impede the company’s growth trajectory.
CenturyLink retains a Zacks #2 Rank, implying a short-term (1-3 months) Buy rating. For the long term, we have a Neutral recommendation on the stock.