Savvis reported a quarter-over-quarter and year-over-year drop in revenues in the three-month period ending Sept. 30. The American Stock Exchange

departed Savvis facilities during the third quarter and the data center provider's CEO Phil Koen said that the company is preparing for departure of three more major clients in the near future.

"Churn has not fully abated at Savvis (and) this seems to be in line with the rest of the industry,"Koen said in a conference call Wednesday. "While churn for the third quarter remained below two percent, we felt the full effect of departure of the American Stock Exchange in the third quarter."

The company observed several key trends that drove churn. One trend was acquisitions that resulted in infrastructure consolidation. Another was companies being forced to downsize by the weak economic conditions. In some instances, companies have been building their own colocation facilities and returning to an in-sourcing model and existing customers are closely scrutinizing their spending and cutting cost wherever they can.

Savvis is expecting one of its few remaining large high-content customers to depart at the end of this year. Additionally, two financial firms are planning to leave in the first quarter of next year. Both are departing NJ2, one of two Savvis facilities that are going to support two new financial exchanges BATS Global Markets is going to launch early next year.

Savvis reported total revenue of $213.2 million in the third quarter - a drop from $219.9 million in the second quarter and from $218.4 million in the third quarter of last year.

Most of the quarter-over-quarter decrease was attributable to an early contract-termination fee of $6.5 million American Stock Exchange paid during the second quarter as a result of its acquisition by NYSE Euronext. NYSE announced the initial agreement to buy the exchange in January of 2008.

Savvis reported a net loss of $9.9 million during the third quarter, compared to a loss of $6.2 million in the previous quarter and a loss of $3.8 million in the third quarter of 2008.

Still, the number of global bookings during the quarter increased by five percent sequentially, Koen said, following a four-percent bookings growth in the previous quarter.

"This is despite the fact that we've seen no real change in purchasing behavior,"he said. "Complex enterprise deals - like the ones Savvis offers - continue to have longer sale cycles, so while we have a healthy pipeline, we continue to see customers reluctant to make any swift changes."

Customers'approval processes remain sluggish and Koen said he expected "a nine-to-12-month sales cycle to remain the status quo"through the next several quarters.

While observing an upswing in its managed-hosting business, Savvis's network services are struggling.

"The network - I'll be honest with you - it's a battle. However, we're starting to see a glimmer of light at the end of the tunnel. Our managed HAN (hosted area network) revenue grew in the third quarter. However, this was muted by overall decline in Internet access revenue."

Revenue from application transport services is also growing, but that growth rate is not enough to compensate for the decline in managed network revenue not associated with the data center.