Savvis Sees End of Expenses

Savvis Communications Corp. announced that it will cut 15 percent of its workforce. Savvis says its network buildout is complete and the company is negotiating with the various purchasers of Bridge Information Systems.

by Roy Mark of dc.internet.com [July 11, 2001]

Network service provider Savvis Communications Corp. (NASDAQ:SVVS) is launching a new operating plan to reduce its cost structure and increase profit margins, including reducing its workforce by 15 percent. The company also announced that it is working on a network services agreement with the bidders for the remaining assets of Bridge Information Systems.

Savvis says these developments will diversify the company's customer base and improve overall operating performance. As a result, the company projects an EBITDA improvement of approximately 60 per cent by the end of the year.

A substantial portion of the Bridge business is under contract to be sold to Reuters and it is expected that the transaction will close in late in the third quarter. In addition, Bridge is also in active discussions with a number of parties for the sale of the remaining assets, which include Telerate worldwide, as well as Bridge's client base in Europe and Asia.

Savvis has already provided these bidders with proposals for continuing service to the Bridge customer base. Savvis estimates the combined revenue it could receive from Reuters and the buyers of Bridge's remaining assets will be $14-16 million per month, which is roughly equal to the revenue it received from Bridge.

"Since this time last year, the quality of Savvis' revenue has dramatically improved," said Rob McCormick, chairman and chief executive officer of the company. "In the near future, our customer base will be better balanced, with no single customer accounting for the majority of our revenue. Reuters and the other bidders are strong, financially stable companies, and we expect that they will aggressively capitalize on Bridge's market position."

With its network expansion and data center build-out now completed, Savvis anticipates no significant capital expenditure for the foreseeable future. As a result of the decrease in long haul market pricing, the company has decided to postpone its deployment of dark fiber and will pursue lit fiber to meet its backbone capacity requirements. The company will reduce data communications costs, including local loop and global backbone costs, as well as transit costs for Internet peering.

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