SAN FRANCISCO, Jan. 26 /PRNewswire-FirstCall/ -- Merriman Curhan Ford (Nasdaq: MERR) today announced that it has initiated coverage on the Cloud Computing space with reports on Rackspace Hosting, Inc. (NYSE: RAX) and Terremark Worldwide, Inc. (Nasdaq: TMRK) with Buy Ratings, and NaviSite, Inc. (Nasdaq: NAVI) and SAVVIS, Inc. (Nasdaq: SVVS) with Neutral Ratings under equity research analyst Alex Kurtz.

"We believe Cloud Computing represents a fundamental shift with regards to how IT organizations manage and source data center computing resources. Companies such as Terremark, Rackspace, SAVVIS and NaviSite are at the forefront of this development," said Alex Kurtz, senior vice president and technology equity research analyst of Merriman Curhan Ford. "Our core differentiator in covering this space is leveraging our expertise within our existing coverage of IT systems vendors, who are competing for the same IT budget dollar and impacted by the same macro trends as a Terremark or a Rackspace."

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Kurtz highlighted these themes in his company initiation reports:

    --  Rackspace Hosting, Inc (NYSE:RAX; $20.47; Buy)
        --  We are initiating coverage of Rackspace with a Buy Rating. We
            believe Rackspace is well positioned for topline growth in 2010 as
            the company benefits from a broader return to IT spending that is
            backed by its strong TCO arguments for both its Managed Hosting and
            Cloud Hosting businesses as IT organizations look for ways to
            rationalize cost out of their data centers. The upside potential for
            this year could certainly be the company's increased focus on the
            Enterprise vertical that, on average, spends 10x that of the SMB
            customer segment. We believe this strategic focus and a Cloud
            business that is aligned well against the early adopters in the
            market along with improving installed base metrics suggest a solid
            outlook. We believe upside exists in the $24-27 range.
    --  Terremark Worldwide, Inc. (NASDAQ:TMRK; $8.25; Buy)
        --  We are initiating coverage of Terremark with a Buy rating. We
            believe Terremark is uniquely positioned in the data center market
            to benefit from several key trends: 1) continuing demand for
            co-location space, as additional Terremark capacity coming online in
            4Q10 and 1Q11 that should bolster this revenue segment, which
            carries flow through margins higher than the other business
            segments;  2) a strong set of Go To Market partners that include
            VMware, CSC, Tata and others that should help Terremark penetrate
            the Fortune 1000 with its Cloud offerings; 3) a Managed Hosting
            business that should over time act as a feeder for its Cloud
            offerings; and 4) a two year head start on the Federal market that
            drives 20% of revenues. We view fair value in the $10-12 range or
            10x-12x EV/CY10 EBITDA.
    --  NaviSite, Inc (NASDAQ:NAVI; $2.60; Neutral)
        --  We are initiating coverage of NaviSite with a Neutral Rating.
            NaviSite is attempting to sell the leases and associated revenues of
            its Co-location business among six of its 16 datacenters. Given the
            immense opportunity that Cloud Computing services represent ($44B by
            2012, per IDC), we believe these coordinated sales, which could
            yield $30-40M in cash, should enable management to refine its
            Go-To-Market strategy. Our discussions with NaviSite's management
            and technical team suggest the company has put considerable effort
            behind its Cloud design with a focus on application management which
            could drive cross-selling opportunities from their managed hosting
            customers. We will reconsider our rating once greater clarity is
            provided for these transactions and the related impact on the
            revenue profile.
    --  SAVVIS, Inc. (NASDAQ:SVVS $16.01; Neutral)
        --  We are initiating coverage of SAVVIS with a Neutral rating. We view
            the SAVVIS story as one of transition, as the Board looks to new
            leadership that will help drive its Managed Hosting and Cloud
            businesses over the next few years and attempt at becoming a more
            strategic partner to corporate IT organizations. While valuation
            appears attractive at 5.8x EV/CY10E EBITDA, the lack of topline Y/Y
            growth (we're at 2.6% for CY10) and a potential two quarter search
            for a new CEO keeps us on the sidelines.

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MCF & Co. expects to receive or intends to seek compensation for investment banking services for all of the companies in its research universe in the next three months. Investors should assume that MCF & Co. is soliciting or will solicit investment banking or other business relationships from the companies covered in this report in the next three months.

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Specific Disclosures

    --  MCF & Co. has not received compensation for investment banking services
        within the last 12 months, and does not expect to receive or intend to
        seek compensation for investment banking services in the next three
        months, from SAVVIS Inc., Terremark Worldwide Inc., NaviSite Inc., or
        Rackspace Hosting, Inc.
    --  Within the last 12 months MCF & Co. has not managed or co-managed a
        public offering for SAVVIS Inc., Terremark Worldwide Inc., NaviSite
        Inc., or Rackspace Hosting, Inc.
    --  MCF & Co. makes a market in SVVS, TMRK, and NAVI and as such buys and
        sells from customers on a principal basis. MCF & Co. does not make a
        market in RAX.
    --  Neither Alex Kurtz nor a member of his household owns shares of SVVS,
        TMRK or RAX.
    --  Neither MCF & Co. nor its officers, principals, employees, or owners own
        options, rights, or warrants to purchase SVVS, TMRK, NAVI, or RAX.
    --  No MCF & Co. employee serves on the board of directors of SAVVIS Inc.,
        Terremark Worldwide Inc., NaviSite Inc., or Rackspace Hosting, Inc.
    --  Neither Alex Kurtz nor a member of his household serves on the board of
        directors of SAVVIS Inc., Terremark Worldwide Inc., NaviSite Inc., or
        Rackspace Hosting, Inc.
    --  Neither MCF & Co. nor its affiliates beneficially owns 1% or more of an
        equity security of SAVVIS Inc., Terremark Worldwide Inc., NaviSite Inc.,
        or Rackspace Hosting, Inc.





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