Data center provider
Equinix Inc.
(
EQIX
) will allow collocation and hosting solutions provider Carpathia
Hosting to use its Hong Kong based International Business Exchange
(IBX) data centers. Financial implications of the alliance were not
disclosed. U.S. based Carpathia specializes in providing cloud
services to certain large enterprises and federal agencies.
Carpathia and Equinix formed an alliance in February 2011, whereby
the companies jointly provide secured data exchange facilities to
federal agencies, financial and healthcare enterprises.
Per their latest agreement, Carpathia will leverage Equinix's data
centers to penetrate into the Asia-Pacific region. While this marks
Carpathia's entry into the Asia-Pacific, Equinix made its presence
felt in the region some years ago.
Equinix has shown relentless efforts in boosting its Asia-Pacific
footprint. In May 2012, Equinix announced plans to acquire an
aggregate of six data centers and a disaster recovery center from
Asia Tone for a cash consideration of $230.5 million. Asia Tone is
a Hong Kong based data center and colocation service provider. With
facilities in Hong Kong, Shanghai and Singapore, Asia Tone creates
opportunities for Equinix to expand its footprint across the
Asia-Pacific. These three regions happen to be the fastest-growing
data center markets.
As per recent studies conducted by research firms Frost and
Sullivan and Gartner, data center growth is most sought after in
the Asia-Pacific. Gartner also expects China to grow into the
second largest global data center market by 2015.
We believe that both Equinix and Carpathia will be able to
capitalize the data center opportunities by jointly providing
colocation, interconnection and managed services to match the
growing demand.
Equinix has seen an annualized revenue growth rate of 30% from the
Asia-Pacific region. In the first quarter of 2012, the region
generated 13.9% of the company's total revenue, reflecting an
increase of 13.3% from the prior-year quarter. The region also
witnessed strong bookings growth.
Equinix has delivered strong first quarter results and provided a
decent guidance for the coming quarter and fiscal 2012. We believe
that strategic acquisitions and international expansion will help
expand its client base, thus enhancing its revenue growth
potential.
We are also optimistic about the company's recurring revenue model
and current expansion plans. However, despite all these positives,
competitive pressure from the likes of
AT&T Inc.
(
T
) and
Verizon Inc.
(
VZ
) cannot be ignored. European exposure and industry consolidation
also remain concerns.
Equinix has a Zacks #3 Rank, implying a short-term Hold rating.
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