FOCUS EQUINIX
IIssue 13, Dec 10/Jan 11 ssue 13, Dec10/J
WHEN EQUINIX STOCKS FELL
Equinix’s stock has played Jeckyll and Hyde this year riding high, and for a brief period looking low. Penny Jones caught up with Equinix’s President of Europe, Middle East and Africa Eric Schwartz to find out why
Inside Equinix’s latest International Business Exchange in Silicon Valley
ric Schwartz starts his interview with a warning about his low voice. Soft it may be, but the head of Equinix in Europe, one of the biggest colocation players not only on the continent but the world, doesn’t need to raise the tone to be heard. Equinix as a company stands solidly on its own and even announcements it wishes to remain hushed, amongst the blare of new data center openings and partnerships that constantly center focus on Equinix, will be heard and acted upon.
E
Back in October Equinix trimmed its forecast for
third-quarter revenue to a
more conservative estimate than originally predicted (to US$328m-$330m instead of US$335m-$338m).
The reaction to this, some might say, was over the top, even panicked according to press at the time. Nevertheless, shares started dropping off other players in the space. It even trickled down to cloud computing companies, with the market speculating that
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www.datacenterdynamics.com
At the time of writing Equinix’s share price sat at US$80.86. Rackspace at US$28.01; Savvis at US$25.98 and Akamai at US $50.88.
Despite this, Equinix says it expects demand for its services to grow around the world and has predicted revenues of US$1.5bn for 2011, not conservative by any means considering analysts have predicted it will bring in US$1.49bn, a cool US$1m off the mark.
the take-up of cloud services may not be as strong as it was once thought.
At the time Equinix lost 33% off its shares, and despite revenue rising overall by 45% dropping to around 70% for its Q3, looking at year-over-year figures, its net income for the quarter actually dropped by 40% from the last quarter.
Equinix’s managed colocation peer Rackspace, lost almost US$3 a share as a result, Savvis lost US$2.24 a share, and Akamai Technologies US$3.66 a share.
In Schwartz’s mind it was all an overreaction. But when you claim to be the world’s largest, and most successful colocation player, even shaving 1% off your yearly revenue (Equinix lowered its full-year revenue outlook to US$1.22bn as a result of the announcement) will raise an eyebrow.
EQUINIX’S ECLIPSE
So was Q3 no more than a blip? An unexpected fork in the path of Equinix’s ongoing success? Schwartz thinks so. For Equinix Q3 was a quarter filled with uncertainty following a costly takeover of Switch and Data, which Schwartz admits may not have gone as smoothly as planned, and a natural period of high churn when contracts were due to change, in one way or another.
“The issues were primarily around the North American business, and I am not just saying that because I led the European business,” Schwartz says.
“North America, being our largest part of
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