Verizon Heads Deeper Into the Cloud

Verizon (NYSE: VZ  ) is all about cloud computing today.

Big Red is sinking $1.4 billion of cash into cloud services by acquiring Terremark Worldwide (Nasdaq: TMRK  ) . It's not like Verizon had been ignoring cloud-based enterprise services before, but the company now suddenly becomes a powerhouse in that market.

Terremark provides hosting, data-center management, and cloud-computing services to large corporations, government arms, and other organizations with huge IT management needs. Tying its services and infrastructure into Verizon's Internet backbone network and enormous resources sounds like a win-win proposition.

It helps that Verizon has been a Terremark customer since last summer, reselling collocation services out of Terremark data centers. That business relationship may have sown the seeds to this buyout.

Does this mark the start of a buyout binge between carrier giants and cloud-service experts? I'm not so sure. Rackspace (NYSE: RAX  ) is valued a little too richly to make telecom mouths water, and Internap Network Services (Nasdaq: INAP  ) is too small to be much of a difference-maker.

SAVVIS (Nasdaq: SVVS  ) looks like great buyout bait on paper, just in case AT&T (NYSE: T  ) or Level 3 Communications (Nasdaq: LVLT  ) wanted to bolster their cloud-service offerings, and I wouldn't suffer a heart attack if I saw an announcement like that, but it's still a long shot.

So let's call this a one-shot deal and see where Verizon can take its new subsidiary. I think it's a fine-looking partnership that accelerates Verizon's ambition to become an "everything as a service" provider and gives Terremark shareholders an instant 35% return on their investment.

Add Verizon to your watchlist to see where Big Red goes next.