Equinix Serves nScaled - Analyst Blog
November 30 2011 - 11:44AM
Zacks
Data center provider Equinix Inc. (EQIX)
recently made an announcement that the cloud infrastructure
provider nScaled has started using the Equinix International
Business Exchange (IBX) data centers in London and Ashburn. The
company is expected to deliver its hybrid cloud and disaster
recovery services to customers.
This apart, nScaled has also opened a storefront, where it is
using the Equinix Marketplace to promote and sell its services to
the more than 4,000 potential customers that are on Platform
Equinix. The basic services offered by nScaled help customers to
connect with service providers to quickly and securely deploy
services.
Equinix’s global footprint of highly secure data centers enables
nScaled to provide services that are at par with the most stringent
compliance requirements and deliver end-to-end enterprise-class
service.
These two solutions taken together will provide nScaled the
platform, which will help them to generate revenue by connecting
directly with Equinix customers, thereby creating a separate
revenue channel for them.
Equinix has been achieving continued business momentum with its
critical mass of customers and the resultant
“network effect” within its IBX centers. Direct interconnection
with its aggregation of networks, which serve more than 90% of the
world’s Internet routes, enables customers to increase the
efficiency of their IT infrastructure, and remove some complexities
of administering and managing their infrastructure, while
significantly reducing costs. This is the advantage which attracts
customers to use the Equinix platform.
This apart, service offering, such as Equinix Exchange and
Equinix Internet Core Exchange significantly reduce the cost of
critical transit, peering and traffic exchange operations by
eliminating the costs of private peering or local loops. The
difficulty and cost associated with changing infrastructure
providers serves as a barrier to entry. As a result, Equinix has a
loyal customer base, which continues to increase slowly with new
wins.
On the other hand, the oversupply of data centers has resulted
in some pricing pressures in the recent past, which, coupled with a
growing trend among companies to build their own data centers,
could act as a dampener for Equinix.
The company delivered mixed third quarter results with earnings
per share coming below our expectation. However, revenue improved
on a year-over-year basis. We believe further growth in the client
base and strategic acquisitions will enhance the company’s revenue
potential and expand its geographic reach. Moreover, the company
reiterated its 2011/2012 guidance and reaffirmed its target of
achieving $3.0 billion in annual revenue by 2015. Moreover, the
company is planning to deliver positive adjusted free cash flow by
2013.
We are also encouraged by Equinix’s decision to expand its
current facilities as well as its recurring revenue model. Though
competitive concerns naturally remain, given offerings from
AT&T Inc. (T) and Verizon
Inc. (VZ) and the European exposure should also not be
discounted, we believe that the new deal wins and positive free
cash flow generation will inspire investor loyalty.
Equinix holds a Zacks #2 Rank, implying a short-term Buy
rating.
EQUINIX INC (EQIX): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
Zacks Investment Research
Equinix (NASDAQ:EQIX)
Historical Stock Chart
From May 2024 to Jun 2024
Equinix (NASDAQ:EQIX)
Historical Stock Chart
From Jun 2023 to Jun 2024