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Savvis, Inc.
Type Public (NASDAQSVVS)
Founded 1995
Headquarters Town and Country, MO, USA
Key people

James E. Ousley, Interim CEO

Greg Freiberg CFO

Jeffrey H. Von Deylen, SVP

Bryan S. Doerr, CTO

Bill Fathers, MD - US

Tom Riley, SVP - International

Suan Soon Cheng, MD - AP

Brian Klingbeil, MD - EMEA

Paul Goetz, SVP - Sales

Mary Ann Altergott, SVP - Corporate Services

Industry Information Technology
Products IT Services including Hosting and Network Services
Revenue $793.8 million USD (2007) $857 million USD (2008)
Operating income $338 million USD (2007) $26.5 million USD (2008)
Net income $250.6 million USD (2007) ($9.2) million USD (2008)
Employees 2,233 (as of December 31, 2007)
Website www.savvis.net

Savvis, Inc. (NASDAQSVVS; formerly Savvis Communications Corporation) provides information technology solutions to businesses and government agencies. Savvis IT solutions leverage services including managed hosting, colocation, and network connectivity, supported by the company's global datacenter and network infrastructure. The company uses the slogan "Built to Respond" to describe its solutions and services, and says it delivers "IT infrastructure as a service" by combining cloud technology, a global network and 29 data centers (approximately 1.44 million square feet) in the United States, Europe, and Asia, automated management and provisioning systems, and a best practices operations model. Savvis has approximately 4,000 business and government customers.[1][2]

Contents

History

The company was founded in November 1995 under the name "Diamond Net" by Tim Roberts (CTO/COO) and Andrew Gladney (Investor/CEO). Gladney was a 33 year old Yale graduate with an MBA from NYU and a trust fund from his grandfather who had been a Seven Up Company founder in St. Louis. The two had met in the St. Louis area in 1994 where both lived, with Roberts working for a computer store and Gladney a customer[3]. Gladney put up all the initial capital ($600,000 or $1 million, according to different sources) for a 75% stake. Roberts closed a revenue contract with Apple Computer as their first large customer, dealing with David Zimmerman and Marty Suzuki at Apple's Cupertino headquarters. The Apple contract allowed the company to showcase the savings and performance enhancements that could be realized through testimonials from the Apple management team. They attracted the notice of St. Louis' Gateway Venture Partners, who subsequently invested millions, changed management, and encouraged a name change to "SAVVIS Communications Corporation" in 1996. Roberts left the company in 1997, and Gladney was demoted from CEO to vice chairman with a salary of $150,000 and then fired in 1999. At the time of the company's IPO in 2000, Gladney's stake was only 1%, and he cashed out in 2001 for $150,000.

Gary Zimmerman, recruited by Roberts from SBC to take the "VP of Engineering" position at Savvis in November 1995, built out Robert's first national network design for Savvis. By leveraging the Apple Computer customer reference and testimonials, Savvis was able to close additional large contracts with other industry providers.

Savvis' original network design was unique within the industry at the time it became fully operational, and there was significant coverage and discussion in the trade press regarding both the network and its architect, Roberts. In 2001, the last year in which Robert's original network design was in use, Savvis was ranked #1 by Keynote Systems, an independent network ratings service, as the years fastest Backbone Network. Keynote's top ranking for Savvis was fleeting, however, as can be seen at Keynote's website: http://www.keynote.com/

After the Gateway investment, Savvis placed Bob Murphy into the Chief Financial Officer position (Murphy was the CFO of Williams Communications prior to his move to Savvis). Murphy attracted additional capital, as well as qualified management to Savvis.

Savvis then recruited Sam Sanderson, former CEO of Rogers Cable, to helm the company. Sanderson brought much needed support to the company, closing substantial contracts and placing the company into an aggressive marketing position.

In 1999 Savvis was acquired by Bridge Information Systems and Rob McCormick was named the new CEO.

After only a year as "a Bridge Company", Savvis was spun off by Bridge as a public company: Savvis' IPO was listed on the NASDAQ stock exchange as "SVVS" in February 2000. Ironically, Savvis' former parent, Bridge, was forced into bankruptcy contemporaneously with the spin-off of Savvis, a peculiar situation which would later cause considerable tensions between Savvis and Reuters (the company who purchased most of the Bridge networking assets). Since Bridge was Savvis' largest customer, responsible for more than 85% of Savvis' revenue, the company found itself in the odd position of relying on a dying company for its day to day income. Bridge's assets were eventually split amongst several bidders, but the core Bridge/Savvis relationships were continued through the acquiring companies.

Savvis has grown both organically and through strategic acquisitions. In 2002 Savvis purchased the hosting operation and customers of Intel Online Services. In 2003 it purchased WAM!NET, a content management and media application service. In 2004 the company purchased the assets of Cable & Wireless America which included 15 data centers and the customers of Exodus Communications, the Tier-1 Internet backbone previously owned by MCI, the content delivery network (CDN) from Digital Island, and a significant professional services organization for $155 million in cash and assumed liabilities of approximately $12.5 million.

Savvis sold the content delivery networks it acquired in 2002 and 2004 to Level 3 Communications in December 2006 for $135 million.

In May 2005 the company announced a change in its name from "SAVVIS Communications Corporation" to "SAVVIS, Inc.". The company press release stated, "The change reflects the company’s expansion from a network services company to a global IT services company..."[4]

Like many "dot-com boom" startups, Savvis suffered from questionable management and posted significant operating losses for several years after its IPO. At one point, Savvis' stock price had fallen from its IPO price of $24 per share to just under $0.22. Other questionable management allegations included rampant nepotism (at one point, four of Savvis' top officers were first degree relatives of CEO Rob McCormick); questionable stock bonus programs; and questionable uses of company funds, for instance, paying for non-employees to attend company sponsored "reward programs" such as the annual "Presidents Club Retreat". Eventually, Savvis found itself with new management and various allegations of management misconduct were not repeated.

In 2006, Savvis announced a 15-to-1 reverse split to shore up the share price. This reverse split may well have saved the company from bankruptcy by allowing institutional investors to invest in Savvis. While the share price has fallen significantly from the day of the split, share prices have consistently remained above the critical five dollar mark. The main investor in Savvis, "Welsh Carson Anderson & Stowe" (a private investment bank) has been widely reported to have lost almost three quarters of a billion dollars in the first four years of Savvis' existence as a public company — despite its rocky start and checkered operating history, Savvis is a ".com bust" survivor that in 2006 was positioned in the "Magic Quadrant for Hosting" published by Gartner.[5]

Spam allegations

On 8 September 2004, Savvis' Operations Security Manager, Alif Terranson, abruptly quit and went public with internal Savvis documents, releasing these documents to media outlets including the BBC[6] the Register,[7] and others.[8] These documents disclosed that Savvis was soliciting the business of some of the worlds worst spammers and that Savvis was realizing "between $200,000 to $2,000,000 per month" from these customers alone.[9] Additionally, Savvis' own memos proved that Savvis was engaging in some of the most highly questionable "bulletproofing" practices for these spamming customers, for instance, swapping out new IPs for "soiled" ones. As a result of the negative media attention, Savvis was forced to resume using Spamhaus (a worldwide organization of spam fighters) to prevent and resolve customer spam issues. In a joint press release, Steve Linford, CEO and Founder of the Spamhaus Project was quoted, "Spamhaus has long recognized Savvis as a 'White Hat Network' with exemplary policies and procedures to control the proliferation of spam. We are pleased to work with Savvis to fight against spam and encourage others in the industry to adopt their leadership model."[5] Savvis is still considered by many to be a haven for spammers, due to the fact that they refuse to accept "munged" reports. A "Munged" report deliberately obfuscates the origin of the person making the complaint, in order to prevent the practice of "listwashing" from being used against the complainant. Savvis requires any reports of spam sent to them to have the full email headers, including an unmunged address, intact in order to act on a complaint. This specific practice is what has led a number of people in the antispam community to continue to class Savvis with the hard core spam supporting networks. Despite this issue, Savvis has successfully transitioned from the #1 most abusive network in North America (based on having over 200 open Spamhaus "cases" in 2004), to a network where actual spam issues are seldom seen and usually acted upon (notwithstanding the non-munging requirement).

CEO and AMEX lap dance charges

In October 2005, then CEO Robert McCormick and Savvis were listed as defendants in a claim brought by American Express. The case involved charges made on an American Express Card issued to McCormick that were reported to be $241,000 at a New York strip club, Scores. McCormick asserted that the charges were fraudulent, similar to two other lawsuits brought against Scores, while Scores claimed to have fingerprints of McCormick's to verify his charges were legitimate.

[10] In November 2005, after an investigation into the matter by the Audit Committee of the Board of Directors, Savvis accepted McCormick's resignation - amid extensive public ridicule by the media. McCormick was tagged as "The Lap Dunce" in The New York Daily News[11] - a reference to the almost quarter of a million dollars he was alleged to have spent on lap dances at the club.

In March 2006, Savvis announced that the litigation brought by American Express against Savvis, McCormick and Scores had been resolved in a negotiated settlement.[12]

The current CEO, Philip J. Koen,was named in March 2006. He was formerly president and COO of Equinix.

References

External links








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