Gobbling up the Cloud
Last week, Verizon acquired cloud services firm Terremark for $1.4 billion. This week, Time Warner gobbled up Navisite, also a cloud services company, for $230 million. Executives at Terremark and Navisite had been growing their businesses rapidly since shifting their primary business focus to cloud computing services.
Both Verizon’s acquisition of Terremark and Time Warner’s of Navisite reflected significant premiums (33-35%) over the acquired firm’s stock price at the time the acquisitions were announced. Meaning? Verizon and Time Warner both project the firms they were acquiring would be worth far more in the future.
Researcher Gartner Group would agree – perhaps not specifically about these two firms, but about cloud computing as an industry. In fact, their research indicates cloud computing will become a $150 billion industry by 2014, up more than two-fold from 2010.
And Wall Street sees further mergers and acquisitions involving cloud computing firms. Since last week’s Verizon/Terremark announcement, several cloud computing firms’ stock prices are up because of the increased M&A activity (example: Savvis’ stock is up 18% since the Verizon deal was announced). Click here to read more about these recent acquisitions.
What does all this mean for those considering technology deployment rather than stock purchases? Perhaps it’s further evidence of what we’ve been blogging for a while now: cloud computing is far more than the latest fad, soon to fall from favor and fade. Rather, cloud computing is a lasting, major technology shift that tech firms are making siginficant investments in and that cloud computing could be a useful technology for your business.
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