Savvis Has to Choose Between Friends

Savvis Communications Corporation has two major financial clients, MoneyLine and Reuters. Unfortunately, as they are competitors, the company had to choose—but found that breaking up can be lucrative too.

by Roy Mark of www.internetnews.com [August 28, 2001]

Network services provider Savvis Communications Corp. (NASDAQ:SVVS), has entered into a five-year, mimimum $122 million agreement with MoneyLine Network, Inc., to provide networking services to the 7,000 client connections that MoneyLine will acquire from Bridge Information Systems. The agreement with Savvis will take effect when MoneyLine completes its acquisition of the Bridge assets, which is expected in September. In the meantime, Savvis will continue to provide service to these 7,000 customers under its contract with Bridge.

MoneyLine, which is the winning bidder for the global operations of Bridge's Telerate subsidiaries, plus the Bridge information businesses in Europe and Asia and the Bridge Trading Room Services product line, is a provider of hosted Internet-based transactional services, real-time and historical content, and applications to financial professionals.

In light of Savvis' previously announced five-year, $366 million networking services agreement with Reuters, which is MoneyLine's primary competitor, the New York-based MoneyLine and its investors have indicated their intent to migrate to their own network. As this transition occurs, MoneyLine will compensate Savvis up to $22 million to acquire the customer premises equipment and switches, which Savvis currently uses to support this customer base.

In the process, MoneyLine will also assume payment responsibility for all local loop costs, thereby negating Savvis' direct costs to support these customers. Savvis will maintain on-net connectivity to these 7,000 financial services clients, which are being acquired by MoneyLine, and are currently part of Savvis' Financial Xchange service.

"We understood the competitive business concerns of MoneyLine, so we structured an agreement that allows MoneyLine to accomplish its long-term goal but is financially beneficial to Savvis in the first three years. MoneyLine and Savvis are committed to working together to ensure a seamless customer transition over the next five years," said Rob McCormick, chairman and chief executive officer of the Herndon, Va.-based Savvis.

MoneyLine's content partners include Dow Jones Newswires, GovPX, Garban-Intercapital plc, IFR Thomson, S&P, Interactive Data, Market News International, Stone & McCarthy, MCM, WeatherMarkets.com and global exchanges. Customers are able to receive and distribute proprietary information without the expense of dedicated terminals. MoneyLine is backed by venture capital firm Accel Partners and several major financial services and communications companies, including Bank of America, Garban-Intercapital plc, Global Crossing, and Merrill Lynch.

David Frear, Savvis' chief financial officer, added, "Once the MoneyLine and Reuters acquisitions of Bridge assets are completed, Savvis will have replaced the Bridge revenue stream, which approximates $14 million per month, with a revenue stream of approximately $16 million per month. Moreover, this revenue will be more profitable than the contract we had with Bridge."

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