Equinox, Inc. Discussed In Data Storage Roundtable

August 27, 2009

In our recent:DATA STORAGE-ROUNDTABLE FORUM Greg Mesniaeff of Principal & Senior Analyst Needham & Company, LLC  gave us his views on Equinox, Inc. (EQIX);

Mr. Mesniaeff: The only name in this area I officially cover is Equinix, and I like it a lot. It trades right now at about nine times EV to next year’s EBITDA and about four times EV to next year’s sales. That’s a slight premium to the group, but I think the premium is well deserved given the company’s unique franchise, its carrier-neutral model, its access to capital, its ability to maintain firm pricing, and also its ability to maintain healthy revenue growth in a challenging environment. Generally speaking, I do favor the carrier-neutral colocation providers, which would include Equinix as well as Switch & Data over the captive ones within the carrier organizations, such as AT&T and Verizon and Level 3. I think the carrier-neutral model is clearly superior on many if not on all fronts.

Another Positive trend for Equinix is as follows;

Mr. Mesniaeff: One thing I can point to about Equinix that I do like a lot is their recent successful foray into Europe. Europe has traditionally been several years behind North America in the macro trends that we have discussed. Added to that is the complexity of having lots of smaller countries with their own dedicated telecom carriers, which I think makes the carrier-neutral model particularly compelling in the case of an organization operating within the European Union, where there is a lot more complexity in negotiating tariffs with some of the local carriers. So that’s an area that I think Equinix has approached very well. The company has been steadily improving its profitability in some of its data centers that it acquired in Europe and continues to do so. I guess the message here really is that the globalization of these networks is creating new opportunities for carrier-neutral players like Equinix that have increasingly a global focus.

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