This morning, CenturyLink has said that it will acquire Internet infrastructure provider Savvis Inc. (NASDAQ: SVVS) for around $2.5 billion in cash and stock. The deal follows the acquisition of Terremark Worldwide, Inc. by Verizon Communications, Inc. (NYSE: VZ) in January for about $1.4 billion. This deal makes somewhat more sense because it gives CenturyLink a foothold in the cloud computing business.

CenturyLink primarily offers communications services to mostly underserved rural parts of the US. These areas are largely overlooked by the big companies like Verizon and AT&T (NYSE: T) because there’s a lot of empty space between customers, space that needs to have expensive cable laid that doesn’t offer much return.

The same situation obtains for CenturyLink, but the company must be thinking that there is some profit to be mined there from the more than $7 billion that the Obama administration included in the stimulus bill to expand broadband access to rural America. While all of the funds have been allocated, so far only about $400 million of that amount has actually been spent. There’s still opportunity there and that must be what CenturyLink is looking for with its bid for Savvis.

Savvis shares posted a new 52-week high when Verizon bought Terremark, as did another player in its sector, Rackspace Hosting, Inc. (NYSE: RAX). Rackspace came within pennies of another 52-week high today, hitting $45.25 in its 52-week range of $15.15-$45.41. Savvis is up nearly 9%, to $39.21 on the $40/share offer from CenturyLink. CenturyLink itself is off about -0.72%, at $40.03, within a 52-week range of $14.16-$46.87.

Paul Ausick

Broadcom Corporation (NASDAQ: BRCM) is down 7.75% premarket to $37.28, relative to a 52-week range of $29.05-$47.93. The company issued poor second quarter revenue guidance.

Ericsson (NASDAQ: ERIC) is up more than 10.5% premarket to $14.55, relative to a 52-week range of $9.51-$13.39. The company reported above expectations Q1 profits.

Savvis Inc. (NASDAQ: SVVS) is up 8.5% premarket to $39.10, relative to a 52-week range of $14.47-$37.98. It was announced the company would be acquired from centurylink for $2.5 billion.

The deal will help Verizon expand its cloud-computing strategy, which the company calls ‘everything-as-a-service.’ That may be what the companies are saying now, but that is unlikely to be Verizon’s long-term strategy to replace its declining landline business. Terremark is on course to post a bigger net loss in its 2011 fiscal year than it did in 2009 and 2010. And Verizon is supposed to be counting on Terremark to make up for the phone giant’s own losses?

Terremark provides what is known as infrastructure-as-a-service (IaaS), that includes servers, data storage, and network bandwidth. These services are central to private cloud computing solutions, and Terremark, with a market cap of less than $1 billion, competes with the likes of Amazon.com (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT).

Verizon plans to keep Terremark’s management team intact, which is a surprise by itself. The company posted a net loss in 2010 of -$32 million. The year before that, the company lost -$11 million. So far in its 2011 fiscal year, which began in April 2010, the company has lost -$18 million. Why keep the management team that led to such sorry performance?

Just about the only good reason that comes to mind is that Terramark’s real estate is both valuable in its own right and an asset that Verizon can wring some profit out of once it dumps Terremark’s money-losing management.

Terremark owns 13 data centers around the world with a total of more than half-a-million square feet of space. Verizon gains data centers that can be used to provide cloud services, or to offer as co-location facilities to pump more data through the network. Data like streaming video.

Now that’s mere speculation at this point, but it’s hard to see why Verizon would buy Terremark just to keep things the way they are. Something else is happening here.

Terremark shares have jumped about 35%, to around $19 share, a new 52-week high. Terremark’s smaller competitors, like Rackspace Hosting, Inc. (NYSE: RAX) and Savvis, Inc. (NASDAQ: SVVS) have also set new 52-week highs this morning.

Paul Ausick

Analog Devices Inc. (NYSE: ADI) Reiterated Buy but raised target to $46 at Gleacher & Co.
Barrick Gold Corporation (NYSE: ABX) Started as Overweight at HSBC.
Broadcom Corporation (NASDAQ: BRCM) Started as Buy at Gleacher & Co.
DaVita, Inc. (NYSE: DVA) Started as Neutral at Baird.
Fortinet Inc. (NASDAQ: FTNT) Started as Buy at Needham.
Gammon Gold, Inc. (NYSE: GRS) Raised to Buy at Canaccord Genuity.
General Motors Corporation (NYSE: GM) Started as Hold at S&P Equity research (Details of the late Monday call).
Goldcorp (NYSE: GG) Started as Neutral at HSBC.
Health Net Inc. (NYSE: HNT) Cut to Hold at Stifel Nicolaus.
Home Inns & Hotels Management Inc. (NASDAQ: HMIN) Started as Overweight at JPMorgan.
Newmont Mining Corporation (NYSE: NEM) Started as Overweight at HSBC.
Potash Corp. of Saskatchewan (NYSE: POT) Raised target to $155 at TD.
SAVVIS Inc. (NASDAQ: SVVS) Raised to Outperform at William Blair.
SunPower Corporation (NASDAQ: SPWRA) Maintained hold but cut target to $11 at Auriga.
Suntech Power Holdings Co. Ltd. (NYSE: STP) Maintained neutral but cut target to $8.50 at HSBC.
United States Steel Corp. (NYSE: X) Cut to Hold at S&P Equity Research (late yesterday call).
Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) Maintained underweight and cut target to $8.10 at HSBC.

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JON C. OGG

Advanced Micro Devices, Inc. (NYSE: AMD) Cut to Market Perform at JMP Securities.
Baidu, Inc. (NASDAQ: BIDU) Started as Buy at Stifel Nicolaus.
China Hydroelectric Corp. (NYSE: CHC) Started as Buy at Roth Capital.
Corning Inc. (NYSE: GLW) Cut to Perform at Oppenheimer.
Ctrip.com International (NASDAQ: CTRP) Started as Buy at Stifel Nicolaus.
CSX Corp. (NYSE: CSX) Raised to Neutral at Goldman Sachs.
Discovery Communications (NASDAQ: DISCA) Raised to Outperform at Cowen.
First Solar Inc. (NASDAQ: FSLR) Cut to Neutral at Credit Suisse.
GameStop Corporation (NYSE: GME) Raised to Outperform at Credit Suisse.
Honeywell International Inc. (NYSE: HON) Raised to Outperform at RBC.
Human Genome Sciences, Inc. (NASDAQ: HGSI) Cut to Hold at Citi; Cut to Underperform at BofA/ML.
KeyCorp (NYSE: KEY) Cut to Neutral at Credit Suisse.
Norfolk Southern Corp. (NYSE: NSC) Cut to Sell at Goldman Sachs.
Perfect World Co., Ltd. (NASDAQ: PWRD) Cut to Sell at Citi; Cut to Underperform at Credit Suisse.
SAVVIS Inc. (NASDAQ: SVVS) Raised to Buy at Kaufman Bros.
Sears Holdings Corporation (NASDAQ: SHLD) Maintain Underperform but Cut target to $55 at Credit Suisse.
Sina Corp. (NASDAQ: SINA) Started as Buy at Stifel Nicolaus.
Sterling Bancshares, Inc. (NASDAQ: SBIB) Cut to Perform at Oppenheimer.

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JON C. OGG

athenahealth, Inc. (NASDAQ: ATHN) Cut to Hold at Auriga.
BroadSoft (NASDAQ: BSFT) Started as Buy at Needham & Co.
Costco Wholesale (NASDAQ: COST) Raised to Buy at Needham.
Higher One Holdings (NYSE: ONE) Started as Neutral at Goldman Sachs.
Lear Corp. (NYSE: LEA) Started as Buy at KeyBanc.
Mosaic Co. (NYSE:MOS) Cut to Hold at Stifel Nicolaus.
OmniVision (NASDAQ: OVTI) Cut to Market Perform at Morgan Keegan.
PG&E Corp. (NYSE: PCG) Raised to Buy at Goldman Sachs.
SAVVIS, Inc. (NASDAQ: SVVS) Raised to Outperform at Wells Fargo.
Wal-Mart Stores Inc. (NYSE: WMT) Cut to Hold at Stifel Nicolaus.
ZoranCorp. (NASDAQ: ZRAN) Cut to Hold at Needham & Co.

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JON C. OGG

Brocade Communications Systems (NASDAQ: BRCD) Cut to Hold at Canaccord Adams.
DragonWave (NASDAQ: DRWI) Started as Overweight at Piper Jaffray.
EMC Corp. (NYSE: EMC) Started as Buy at UBS.
JDS Uniphase (NASDAQ: JDSU) Started as Buy at Citigroup.
Microsoft (NASDAQ: MSFT) Reiterated Buy and $33.50 target at Auriga (on CFO departure).
NRG Energy (NYSE: NRG) Cut to Neutral at UBS.
NetApp, Inc. (NASDAQ: NTAP) Started as Buy at UBS.
SAVVIS Inc. (NASDAQ: SVVS) Started as Market Perform at Wells Fargo.

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JON C. OGG

Acorda Therapeutics (ACOR) Raised to Overweight at Piper Jaffray.
Coca-Cola Entertainment (CCE) Raised to Buy at Argus.
Cree (CREE) Raised to Buy at Merriman Curhan Ford.
CVS Caremark (CVS) Raised to Outperform at William Blair.
IntercontinentalExchange (ICE) Raised to Market Perform at KBW.
Savvis (SVVS) Raised to Overweight at Morgan Stanley.

JON C. OGG
AUGUST 5, 2009

• BB&T (BBT) Cut to Underperform at FBR.
• Chubb (CB) Cut to Underweight at JPMorgan.
• DealerTrack (TRAK) Cut To Hold at Deutsche Bank.
• F5 Networks (FFIV) Cut to Underperform at Merrill Lynch.
• Hertz (HTZ) Cut to Neutral at Goldman Sachs.
• Juniper Networks (JNPR) Cut to Underperform at Merrill Lynch.
• New York Community Bancorp (NYB) Cut to Underperform at FBR.
• NYSE Euronext (NYX) Cut to Neutral at Goldman Sachs.
• SAVVIS (SVVS) Cut to Hold at Jefferies.
• Southern Copper (PCU) Cut to Underperform at Merrill Lynch.

Jon C. Ogg
September 24, 2008

• Angiotech Pharmaceuticals (NASDAQ: ANPI) raised to Outperform at RBC Capital Markets.
• BP plc (NYSE: BP) raised to Outperform at Credit Suisse.
• CBS (NYSE: CBS) downgraded to Market Perform at Wachovia; Raised to Hold at Citigroup.
• James River Coal (NYSE: JRCC) raised to Buy at UBS.
• MEMC Electronics (NYSE: WFR) downgraded to Neutral at JPMorgan.
• SAVVIS (NASDAQ: SVVS) downgraded to Hold at Jefferies and downgraded to Equal-Weight at Lehman.
• Smith & Nephew (NYSE: SNN) raised to Outperform at Wachovia.
• Sohu.com (NASDAQ: SOHU) downgraded to Perform at Oppenheimer.
• The Knot, Inc. (NASDAQ: KNOT) raised to Outperform at Oppenheimer.
• Under Armour (NYSE: UA) downgraded to Hold at Citigroup.

Jon C. Ogg
April 30, 2008