SAVVIS, Inc. (NASDAQ:SVVS), a global leader in IT infrastructure services for business applications, today announced plans to develop four new data centers to help meet customer demand for SAVVISâ managed hosting and colocation services. SAVVIS will develop the centers, located in the Atlanta, New York and Washington, DC metropolitan areas and in Santa Clara, Calif., with the intention of making them available to customers in the fourth quarter 2007.
Phil Koen, SAVVIS' Chief Executive Officer said, "SAVVIS is focused on delivering IT infrastructure as a service and weâre committed to being a leader in this space. Our new data center facilities, opening in the fourth quarter 2007, will provide customers with state-of-the-art managed hosting and colocation services, including our industry-leading virtualized utility services.â
In total, the four centers will add approximately 180,000 square feet of raised floor space. This increases SAVVISâ total data center footprint more than 10 percent to over 1.5 million square feet. All of the new centers will be designed to exacting standards for security and reliability, power availability, cooling, network connectivity, and environmental controls. SAVVIS has executed lease agreements for each of the sites, one of which is contingent upon certain conditions expected to be met in January 2007.
SAVVIS will deliver a broad range of hosting, network, and security services from these data centers including colocation, managed hosting on dedicated platforms, and virtualized utility services that provide significant cost and performance benefits for enterprise customers. SAVVIS plans to reserve approximately 20% of each facility for managed hosting and virtualized utility services, offering customers the flexibility to mix, match, and add services within a single facility and across data centers.
SAVVIS anticipates spending approximately $200 million in 2007 to fully develop the four centers. Funding will be provided by the proceeds of the sale of the CDN services business announced today, available cash and available debt capacity. The company expects that the expansion will negatively affect Adjusted EBITDA* by approximately $6 million in 2007 and will begin to generate revenue in the fourth quarter of 2007, and has incorporated that expectation into its financial outlook for 2007 announced today. The company anticipates that in the first full calendar year of operation, the four centers together will generate a total of approximately $50 million of revenue, with Adjusted EBITDA margins of approximately 40%. The new facilities are expected to be operating cash flow positive within twelve months of opening. Given strong demand and limited supply of colocation facilities, the company expects that the 80% of space dedicated to colocation will be fully occupied within 18 to 24 months of opening, and that 20% of new space committed to the managed hosting services will be ample to meet customer demand for five to seven years.