Will Savvis Sell Its CDN?

Savvis (Nasdaq: SVVS) is looking seriously at selling off its content delivery network (CDN), and has already received numerous offers from interested parties, says Merriman Curhan Ford & Co. analyst Colby Synesael in a note to investors Wednesday.

Savvis management has been talking about various "strategic options" for its CDN business since last Spring. But during an October 19 call with analysts, Savvis execs mentioned only selling or partnering as available options, Synesael says in an email note to Light Reading Thursday.

The Savvis CDN, which derives most of its revenue from one customer -- Microsoft Corp. (Nasdaq: MSFT) -- consists of 500 server clusters located on 120 networks in 29 countries. (See Video Caching Steps Into the Limelight.) The CDN market leader Akamai Technologies Inc. (Nasdaq: AKAM) and challenger Limelight Networks Inc. (Nasdaq: LLNW) are possible bidders, sources say, as well as a number of syndicates led by venture capital and other private equity firms. (See Limelight Lands $130M .)

Savvis spokesman Carter Cromley said Wednesday he "could not comment on rumor and speculation."

"Potential buyers span the entire telecom services industry from owners of actual long-haul and metro fiber to other Internet infrastructure companies to potential technology real estate partners," writes Merriman's Synesael in a research note released yesterday.

Microsoft, or one of its vendors, could be a dark horse to buy the business. "We believe companies who have a significant relationship with Microsoft could be interested since approximately 80 percent of Savvis’ CDN revenue comes from the company," Synesael writes.

Savvis is also selling its WAM!Net! media management business. Cromley says WAM!Net! is used mainly by printers and publishers to manage and transport large files. The business is closely tied to the CDN business in terms of business processes! resources! and personnel! WAM!Net! will likely be sold with the CDN.

Synesael estimates the Savvis CDN business and WAM!Net! together are worth roughly $120 million. The two businesses together have 90 employees and combined revenue of $40 million per year.

Savvis's main business is supplying applications and hosting services to enterprises in North America, Europe, and Asia. The company has one marquee CDN customer, but hasn't been able to diversify or expand that business in recent months.

— Mark Sullivan, Reporter, Light Reading

Mark Sullivan 12/5/2012 | 3:36:06 AM
re: Will Savvis Sell Its CDN? We've heard from folks who say a finalist has emerged from the pack as the buyer of Savvis' CDN. Anybody know who it is, and how much they will pay?
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