Time Warner Buys NaviSite for SMB Cloud Computing Push

February 2, 2011

3 Min Read
Time Warner Buys NaviSite for SMB Cloud Computing Push

By samdizzy

For the second time in recent days, a Talkin’ Cloud Stock Index member has been acquired. The latest deal involves Time Warner Cable Inc. buying NaviSite Inc., a cloud services provider that specializes in SaaS and managed applications from Oracle and Lotus. The big twist: Time Warner plans to use NaviSite for an SMB (small and midsize business) customer push, promoting cloud computing and managed services to smaller customers.

The $230 million deal represents a 33% premium to NaviSite’s Tuesday closing price, Time Warner Cable disclosed in a prepared statement. NaviSite in August 2010 rejected an unsolicited (and less lucrative) takeover offer from Atlantic Investors. The Time Warner Cable-NaviSite combo comes only a few days after Verizon Communications acquired Terremark, another Talkin’ Cloud Stock Index member and cloud services provider.

Managed and Cloud Services for SMBs

In a prepared statement, Glenn Britt, Chairman and CEO of Time Warner Cable stated:

“NaviSite provides us with a successful managed services business and a new, innovative managed cloud platform representing significant new growth opportunities. We expect to build upon NaviSite’s successful enterprise-class offerings, and their operational capabilities, infrastructure and expertise to more rapidly create a robust managed services offering for small and medium sized businesses.”

The announcement says NaviSite has more than 1,200 managed services customers. The deal is expected to close in 2Q 2011 and is subject to NaviSite shareholder and regulatory approval.

NaviSite employs roughly 570 people. It operates 10 data centers in the United States and the United Kingdom, including two SAS 70 Type II certified data centers, and network operations centers in Gurgaon, India and Andover, Massachusetts, the Time Warner Cable announcement indicated.

Cloud Bubble or Cloud M&A Boom?

Meanwhile, it seems clear that big telecommunications companies and broadband service providers are scouring the market for smaller MSPs and cloud computing specialists.

Already, potential target Savvis has said it’s not up for sale. But as my dad (a real estate veteran) has often stated: Everything is for sale; it’s just a matter of negotiating the price and terms.

And some venture capitalists say we could be witnessing a cloud computing bubble. Indeed, our own Talkin’ Cloud Stock Index rose roughly 50 percent in 2010, though the index has been volatile so far in 2011 as (A) shareholders worry about overheated valuations but (B) potential M&A deals continue to be discussed.

Utimately, the Time Warner Cable-NaviSite deal could position NaviSite against smaller VARs and MSPs that service small businesses with online backup, managed email and SaaS applications.

For smaller VARs and MSPs trying to navigate the emerging cloud landscape, it seems like market shifts are now occurring daily. But I don’t think VARs and MSPs should go into panic mode. Big service providers and broadband providers like Time Warner Cable have never been know for personalized, face-to-face SMB customer service.

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