Expert Analyst Todd C. Weller Looks for Data Center Stocks to Deliver Better Results and Fundamentals in the Second Half of the Year, as a Current Negative Sentiment Weighs on the Sector

Wall Street Transcript

67 WALL STREET, New York - September 20, 2013 - The Wall Street Transcript has just published its Data Hosting Centers and Data Storage Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Data Hosting Centers - Flash Memory - Cloud Computing Secular Trends - Data Center REITs - Colocation, Managed Hosting and Cloud Computing - International Enterprise and Consumer Demand

Companies include: Digital Realty Trust Inc. (DLR), DuPont Fabros Technology, Inc. (DFT), Cortex Pharmaceuticals Inc. (COR), Equinix Inc. (EQIX), Rackspace Hosting, Inc (RAX), Intel Corporation (INTC), Iron Mountain Inc. (IRM), Amazon.com Inc. (AMZN) and many more.

In the following excerpt from the Data Hosting Centers and Data Storage Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Are there any particular industry trends that are impacting the companies for better or worse in terms of changing or growing needs, technological advances, etc.?

Mr. Weller: I still think the high-level secular drivers for data centers continue to be positive. We have continued growth of Internet, growth of data, growth of mobile devices fueling that. There's also a continued shift to cloud computing, which means you're accessing applications and IT infrastructure out in the cloud, which is essentially in a data center.

So all those demand drivers continue, we think, to be positive. And there's still a significant amount of data center capacity today that is in-sourced - it's controlled by companies - but we think either directly through data center outsourcing or indirectly through trends such as cloud computing, that that is flowing to third-party data centers. So we think trends there are positive from a demand side; I think we have to focus on where more of the concerns are, around supply and competition in the market.

We're always paying attention to technological change. For example, you have servers now that use multicore processors, and so you can continue to do more with less. One of the things that we're looking at as far as trends in the future, and I think this will take some time to play out, is that there's a lot of talk around ARM-based servers.

ARM-based servers, instead of using traditional chips from Intel (INTC) that are called x86, use chips that you'd find in a mobile device, and those types of chips require significantly lower power. So if there was a move where all of a sudden customers were deploying lots and lots of servers that required significantly less power, that would be a negative for data center demand. That's a very early-stage trend right now, it's a very niche area of the market, but that's something we are paying attention to over the long term.

TWST: What are your stock recommendations right now?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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