Wall Street Transcript Interview with Barry McCarver, Research Analyst with Stephens Inc.: Demand from New Verticals and Geographies for Data Centers and Hosting

Wall Street Transcript

67 WALL STREET, New York - February 8, 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, Equity Analysts and Money Managers. 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 - Internet Infrastructure Build - Big Data, PCIe Storage, Cloud Computing and the Virtual Desktop - Data Center REITs - Colocation, Managed Hosting and Cloud Computing - Data Center Expansion -

Companies include: Cogent Communications Group In (CCOI), EarthLink Inc. (ELNK), Level 3 Communications Inc. (LVLT), tw telecom inc. (TWTC), Windstream Corporation (WIN), 8x8 Inc. (EGHT), ShoreTel, Inc. (SHOR), Cbeyond, Inc. (CBEY), Premiere Global Services, Inc. (PGI), Equinix Inc. (EQIX), Rackspace Hosting, Inc (RAX)

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 you seeing particularly strong, or on the other hand particularly weak, demand from certain customer verticals or geographic markets driving business?

Mr. McCarver: I think most every vertical is increasing now. If you look at the industry verticals, financial services and media - so large trading firms, regional banks, and content providers and media companies - have always been the fastest growing. Today they are probably not the fastest growing verticals, because they are by far the largest verticals that are outsourcing the solutions, but there is still quite a bit of growth there. But for the most part, they are pretty well-penetrated. They may see an increase in demand, but a lot of those companies have already outsourced, so what that's giving rise to in terms of the verticals is health care services, government, energy-related services, legal and education - they are all new verticals that are experiencing some of the highest growth in terms of a little bit less mature in their adoption of these services, and it's really beginning to ramp.

Geographically, if you look in the U.S., I think what you are seeing on the colocation side specifically is still strong growth, but more mid-to-high-teens-type growth. If you look on an annual basis, that volume growth as well as pricing are starting to mature and starting to decelerate a little bit.

Still very fast growth - it's still a growth industry - but where you might have seen 30% and 40% growth from a combination of volume and pricing, now it's coming down to lower double-digit-type growth rates, because it's very mature in the U.S. And on the colocation side, you are seeing price much more stable and volume more like 10% to 15%.

What you are seeing in Europe and in Asia Pacific is the exact opposite...

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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