Data center provider Equinix Inc. (EQIX) recently announced its plan of opening a new data center in Zurich (ZH5) and expanding its existing data center in Geneva (GV2). The company’s plan is backed by sustained customer growth and growing demand for data centers in Switzerland.
The to-be-opened data center is expected to cater to a large customer base and will encompass 6,670 square meters of space and adhere to the Gold LEED standards. The site will be integrated within Equinix’s Zurich campus through fiber ring, offering direct connectivity to more than 75 carriers.
Data center opportunity is slowly increasing, and the company is trying to grab a major share of the pie. The company is exploring opportunities not just in Zurich, but also in Washington D.C sensing the high demand for colocation platforms. The Washington area serves as the eastern hub of Internet traffic exchange in the U.S., and is therefore an important business area for Equinix.
Increasing data exchange through Internet calls has augmented the demand for more data centers in the region. Currently, with ten operating IBXs and the eleventh one underway, it will be easier for Equinix to meet the growing business needs.
Commensurate with its infrastructure investments, Equinix is seeing a growing number of new deals, The most recent one being with Unitas Global, a managed infrastructure service provider. As per the deal, Unitas will be using Platform Equinix in regions like Singapore and Australia as business hubs to expand globally. This new service will help the company to reach out to its customers in the Asia-Pacific region.
Apart from China, India, Japan and Australia, the United States also offers good growth opportunities. We believe that favorable pricing trends in the U.S. coupled with planned expansion will boost revenue growth in the upcoming quarters. Equinix is also seeking further growth opportunities in emerging markets.
Equinix has delivered strong second quarter results and provided decent guidance for 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. Despite all the positives, competitive threats from the likes of AT&T Inc. (T) and Verizon Inc. (VZ) raise our apprehension. European exposure and industry consolidation also concern us.
Equinix has a Zacks #3 Rank, implying a short-term Hold rating.
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