Savvis' Content Delivery Network Will Complement Level 3's Internet Backbone

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Includes: LVLT, SVVS
by: SA Editors

Level 3 will purchase the content delivery network of Savvis for $135 million. Level 3 will use the network's intellectual property and customer contracts to meet the growing demand for online gaming and entertainment. The unit to be acquired has 50 employees, and generated around $15 million in revenue for the nine months ending Sept. 30. As Microsoft is one of Savvis' largest customers, analysts are suggesting that this move is an attempt on the part of Level 3 to profit from the software giant's expanding interest in Internet search and entertainment. Savvis' CDN unit includes IP transit, wavelengths, metro transport, and collocation which complements Level 3's existing national fiber network. The company will now be able to offer end-to-end content-distribution solutions. Yesterday, Level 3's stock remained at $5.66 while Savvis shares gained about 1%.

• Sources: Reuters, InformationWeek, MarketWatch.com
• Related commentary: Level3 and Akamai Can't Both Win In Internet Video Delivery, Level 3's Recent Press Release Tells Us There's Still Plenty of Fiber Capacity Out There, Level 3 Communications Up After Cramer's Lightning Round 'Booyah'
• Potentially impacted stocks and ETFs: Level 3 (NASDAQ:LVLT), Savvis (NASDAQ:SVVS), Microsoft MSFT) Competitors: Broadwing Corp. (BWNG), Google (NASDAQ:GOOG), Global Crossing (NASDAQ:GLBC), Verizon Communications (NYSE:VZ), Sprint Nextel Corporation (NYSE:S), Lucent Technologies Inc. (LU) ETFs: PowerShares Dynamic Networking (NYSE:PXQ), iShares Goldman Sachs Networking Index (NYSEARCA:IGN)

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