Mr. Synesael: I'm positive on the group. Out of the four subsectors I cover within telecom and data services, the two that I'm most favorable on are neutral co-location providers like Equinix (EQIX) and Switch & Data (SDXC), as well as managed hosting providers like Savvis (SVVS) and Terremark (TMRK). In terms of why I'm positive, from a modeling perspective, I like the fact that they're recurring revenue-based models. I think that that gives a lot of visibility for shareholders. Also, from a fundamental point of view, if you step back, data centers are really still a fairly new industry that began with the creation of the Exodus's and Verio's of this world, call it 10 or 15 years ago. And people that are buying data centers from third-party providers like those I've mentioned are really buying these services for the first time. Rarely are you seeing guys going from an Equinix to a Switch & Data, or vice versa. It's really them going from their own in-house solution to a third-party solution for the first time. When you look at the life cycle of any company or any industry, right now we're in that growth phase for the data center space, and that's enabling them to put up growth that is far above the industry average for other telco or technology industries. The data center space is growing somewhere between 15% and 25% on a year-over-year basis, depending on the subsegment. So I think all that is very positive from an investment point of view, and therefore gives these guys an opportunity to put up some good returns for their shareholders.
Tickers included in this excerpt: EQIX, RAX, SOXC, SVVS, TMRK
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.