Managed Services, VMware Lift Terremark

Terremark Worldwide Inc. has been busy of late, generating strong managed services revenue and also getting cozy with VMware. Here’s a closer look at the provider of colocation and managed services.

Terremark this week reported revenue for its March-ended fourth quarter of $68.9 million, a 21 percent boost compared with the same quarter last year. Terremark’s net income for the quarter was $3.5 million;  the company posted a $2.7 million loss a year ago. Translation: Terremark seems to be gaining momentum amid the recession.

Also this week, Terremark said VMware will buy a 5 percent equity stake in the company, an investment of $20 million. Company executives also hit the road this week, presenting at Kaufman Brothers and Cowen and Company conferences.

Here are a few highlights from Terremark CEO Manual Medina’s Kaufman Brothers presentation.

On VMware:

Medina called the equity state an endorsement, adding that the “cash doesn’t hurt either.” He said the arrangement doesn’t preclude the company from working with other virtualization vendors, but noted that Terremark is predominantly a VMware shop.

“We don’t see anybody passing VMware in the next couple of years,” he said.

On clouds and government business:

Cloud computing in government has immense business potential, according to Medina.

He said agencies aren’t going to put their classified information on a multi-tenant cloud, but noted that many agencies will be able to launch private clouds. And Terremark is willing to help out in that regard.

“Given that we have the ability to design these private clouds … we expect that opportunity to be very big,” he said.

Cloud-related government business has already started rolling in. The General Services Administration earlier this year tapped Terremark’s enterprise cloud platform for the USA.gov Web portal.

On managed security services:

Referring to security as “the tip of the spear,” Medina said there is no better way to establish a relationship with a major customer than to resolve a security issue. Terremark’s security services cover firewall and intrusion prevention gear and vulnerability management among other offerings.

On business mix:

Medina said the company plans to maintain its present business mix: 60 percent in managed services, 35 percent in colocation and the remainder in network interconnection services. Managed hosting generates cash flow of $5,310 per square foot, while colocation provides $600. He noted, however, that both areas are important to the company’s business model, as one one service feeds upon the other.

What’s next:

MSPmentor is tracking an emerging business relationship between Terremark and Kaseya. The relationship involves Kaseya’s SaaS (software as a service) strategy. Details on MSPmentor soon.

Contributing blogger John Moore covers Master MSPs and Web hosts, and has written about the IT channel for two decades. MSPmentor is updated multiple times daily. Follow us via RSS, Facebook and Twitter. And subscribe to our enewsletter, webcasts and Resource Center.