Verizon-Terremark Deal Lifts Cloud Stocks
Major financial markets fell sharply last week amid the political turmoil in Egypt. However, the Talkin’ Cloud Stock Index rose 2.76% for the week ending January 28, 2011. The reason: Verizon’s takeover of Terremark lifted shares in rival cloud computing specialists such as Rackspace and Savvis, though not all cloud stocks rose.
Before we take a look at results, this is a reminder that the Talkin’ Cloud Stock Index doesn’t give specific financial advice. How you choose to invest your money is your decision and your decision alone. We just watch these 20 cloud stocks to research cloud hype vs. real performance.
Terremark (TMRK) itself was the big winner of the week with a 45.76% one-week climb to $18.92 a share, thanks to Verizon’s takeover offer. The strategy calls for Verizon to promote Terremark’s infrastructure-as-a-service (IaaS) to large enterprises and government agencies.
And as Talkin’ Cloud predicted, the rising tide lifted many cloud computing ships — including Rackspace Hosting (RAX) and Savvis (SVVS), which both experienced sharp spikes in their stock price. Rackspace rose a hefty 8.2% for the week and cloud service provider Savvis jumped 13.50% on the week.
Still, some cloud stocks fell during the week, including a 3.54 percent dip at Amazon (AMZN). Investors were clearly not impressed with Amazon’s most recent financial statement, and their closing price reflects that lack of confidence. Of course, that doesn’t necessarily have anything to do with Amazon Web Services, but Talkin’ Cloud knows that their cloud margins are shrinking.
Meanwhile, there’s also some concern about a cloud bubble. And political unrest in Egypt could further pressure stocks the week of January 31, 2011.
Either way, the Verizon-Terremark deal could set the stage for more cloud computing mergers and acquisitions.