Yahoo's New Data Center in NY - Analyst Blog


Internet giant Yahoo! Inc. ( YHOO ) recently announced its plans to build a new data center in Lockport, NY to meet the fast-growing demand for Internet usage and data storage capacity.

Yahoo is accelerating its investments in data centers in western New York. The expansion will involve an additional investment of $168 million and will create 115 additional positions.

Yahoo!'s new data center will be built on the Yahoo! Compute Coop (YCC) architecture. The YCC is an energy-efficient data center design that uses significantly less energy and water than conventional data centers. The unique shape of the building allows the company to use renewable energy like wind for cooling purposes. This eliminates the need for expensive and energy-intensive chillers to keep the servers cool.

Companies like Google Inc. ( GOOG ), Apple Inc. ( AAPL ), as well as other cloud computing providers are all trying to use renewable energy to power their data centers, helping to contribute to reductions in global warming, cut energy costs and comply with regulations.

The need for data center expansion is rising due to the growing demand for cloud computing and the ever-increasing needs of Internet users. The data centers include large banks with computer servers that process everything from Internet searches to email, videos and other services.

Independent research firm Gartner predicts that datacenter hardware spending will most likely cross $126.2 billion in 2015. These technology warehouses are witnessing strength, as video streaming, smartphones and apps are boosting demand for hard drives needed to run them.

In the third quarter of fiscal 2012, Yahoo generated revenues of $1.20 billion, which were down 1.3% sequentially and 1.2% year over year. Traffic acquisition cost (TAC) was down 17.7% sequentially and 22.2% from last year. Excluding these costs in all periods, net revenue was essentially flat on a sequential basis and up 1.6% from last year, in line with the consensus estimate.

Currently, Yahoo retains a Zacks Rank #3 (Hold). Another stock that has been performing well and is worth considering is Intersil Corp. ( ISIL ), which carries a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , GOOG , ISIL , TAC , YHOO

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