CenturyLink Acquires AppFog

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CenturyLink Inc. (CTL) announced plans to take over a Platform-as-a-Service (PaaS) provider – AppFog, Inc. – for an undisclosed figure. The acquired company will be added to Savvis Inc. – the subsidiary of CenturyLink.

AppFog – which extends custom-made PaaS capabilities to software developers and public cloud services through www.appfog.com – will enhance the product portfolio of Savvis, which renders cloud computing and managed hosting solutions for enterprises. AppFog is being utilized by 100,000 developers and more joining everyday, who roll out more than 150,000 applications.

With this acquisition, AppFog's public cloud PaaS will be combined with savvisdirect online channel, enabling the company to offer private, dedicated deployments to Savvis' enterprise clients. Savvis Cloud suite will also benefit from several programming languages and interoperability between the public and private cloud environments of Portland, Ore.-based AppFog.

CenturyLink management views this acquisition as a growth driver as AppFog's high-quality Platform-as-a-Service offerings along with Savvis' industry-leading infrastructure base will likely create a strong and reliable network of could computing services.

In mid 2011, CenturyLink acquired the information technology (IT) services provider Savvis for $2.5 billion. Since then, the unit has contributed immensely in uplifting the performance level of CenturyLink.

Savvis is on track to enlarge its global foothold with the expansion of 10 data centers within 2013. The subsidiary aims to capture more businesses by increasing its data center wings in strategically suitable and secure locations, boosting the interconnectivity of the company’s core operations.

We believe that the expansion of data centers, launch of new cloud products and lucrative acquisitions will help CenturyLink to generate higher revenues and earnings in the coming months. These initiatives bequeathed several additional benefits like greater scale of operations and increasing productivity, apart from providing the company with a competitive edge over larger telecom carriers like AT&T Inc. (T) and Verizon Communications Inc. (VZ).

CenturyLink, which has business tie-ups with SAP AG (SAP), has a Zacks Rank #3, implying a Hold rating.

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