EQIX Equinix Inc

Global data center service provider Equinix Inc. (EQIX) has recently won a couple of new contracts, which will improve its pipeline considerably. First, TeliaSonera International Carrier, which is a global provider of cross-border IP and managed services, selected Equinix to expand its offerings globally through 25 of Equinix’s International Business Exchange (IBX) data centers in North America, Europe and the Asia-Pacific.

TeliaSonera’s customers can accelerate business growth by using the Equinix platform. This platform is expected to protect their infrastructure from external threats and will also help them to place their assets and applications close to their target markets.

The company is of the opinion that this will particularly benefit the media and gaming companies, which increasingly need to locate close to their end users in order to speed up content delivery and ensure optimal performance.

Another company Catalyst Health Solutions, Inc. (CHSI), a national level pharmacy benefit management (PBM) Services Company in the U.S., has entered into a technical collaboration with Equinix to host critical business functions, including claims processing and data warehousing.

As per this agreement, Catalyst will deploy different power grids at different Equinix International Business Exchange (IBX) data centers. This will help the company to take advantage of the huge IT infrastructure of Equinix.

With its presence across various geographical regions and by becoming the preferred data destination among major players, Equinix has developed an industry leading global footprint. The company’s worldwide presence has resulted in high network density with a vertically focused approach, which will continue to support demand.

Moreover, the combination of Switch & Data facilities will provide extra capacity in some markets & enhance pricing over time.

On the flipside, excessive data center creation has resulted in significant pricing pressure within the industry, Also, technological advancements that avert the need for additional data center space could act as a dampener for the company.

Equinix is expanding its current facilities and client base, and is also exercising fiscal discipline. The new data centers were kicked off successfully, especially in Europe, and contributed strongly to the revenue growth in 2010.

We believe that the company has a decent line-up of new data centers for 2011. We are also optimistic on its recurring revenue model and current expansion plans.

Despite all the positives, we remain a bit apprehensive regarding stiff competition from networking aces like AT&T Inc. (T) and Verizon Inc. (VZ). European exposure is also a cause for concern. Moreover, capex growth could also impact near-term results.

Currently, Equinix has a Zacks #3 Rank, implying a short-term Hold recommendation.

 
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