Equinix Secures Back-to-Back Deals - Analyst Blog
September 13 2011 - 1:15PM
Zacks
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 is because the platform is expected to
protect their infrastructure from external threats and also help
them place their assets and applications close to their target
markets.
The company is of the opinion that this will particularly
benefit media and gaming companies, which increasingly need to
operate 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 take advantage of the huge
technical infrastructure of Equinix.
Equinix’s geographical diversity and preferred data destination
among major players have 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 pressures, while technological advancements
that obviate the need for additional data center space, may 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 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). Moreover, capex growth could also impact
near-term results.
Currently, Equinix has a Zacks #3 Rank, implying a short-term
Hold recommendation.
CATALYST HEALTH (CHSI): Free Stock Analysis Report
EQUINIX INC (EQIX): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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