SAVVIS, Inc. Sells Two Data Centers To Microsoft For $200M

SAVVIS, Inc. announced Friday the sale of two adjacent data centers in Santa Clara, California to Microsoft Corp., the buildings' sole occupant, for $190 million, plus $10 million in advanced revenue. The agreement involves the termination of Microsoft's service contracts with SAVVIS, which wouldn't have expired until 2010. As a result of the sale, SAVVIS, which is a global IT services provider, was required to reduce its revenue and earnings outlook to $805-$820 million and $155 million-$165 million respectively. Analysts polled by both Thomson Financial and Reuters were looking for 2007 revenue of $828 million. According to SAVVIS CFO Jeff Von Deylen, "As the market dynamics changed, we recognized that if we were able to sell (the facilities), we could diversify our footprint...which is better risk management for us." Shares of Savvis fell 2.04% to $49.51 Friday.

Sources: Press Release, Reuters, AP, Dow Jones Newswire, MarketWatch
Commentary: Verizon Could Improve Competitive Position By Buying Savvis • Savvis' Content Delivery Network Will Complement Level 3's Internet Backbone
Stocks/ETFs to watch: SAVVIS, Inc. (SVVS), Microsoft (MSFT). Competitors: Level 3 (LVLT)Global Crossing (GLBC), Electronic Data Systems Corporation (EDS). ETFs: PowerShares Dynamic Networking (PXQ), iShares Goldman Sachs Networking Index (IGN)

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