Wall Street Transcript Interview with Todd C. Weller, Managing Director at Stifel, Nicolaus & Co., Inc.: Positive�High-Level Secular Drivers for Data Centers�

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: Regarding all those fundamental concerns, is there a slowdown in demand? Is there too much new supply or new entrants?

Mr. Weller: I think there are a couple of things. First of all, I'd say demand for wholesale - wholesale is larger amounts of data center space and power - can tend to be a more volatile and lumpy business. We did see that slow down in the middle of 2012, although we saw that pick up at the end of 2012, and so far activity levels in the first half of 2013 have been positive.

On the pricing side of the equation, we have seen, due to increased supply, increased competition, increased sophistication of customers, that pricing is lower today than it was three or four years back. But we do think that pricing has generally stabilized over the last couple of quarters. Pricing issues can come up with respect to new leases, but also when data center providers renew leases, and that's where we have seen some negative rent rolldowns on lease renewals. We've had instances with DuPont Fabros having that, as well as Digital, and that's been a point of concern in the market.

TWST: Did any other themes or a tone in comments stand out from the most recent quarterly earnings calls and reports?

Mr. Weller: I think coming out of earnings, for example with Digital, if you looked at the fundamentals on the whole, the fundamentals were good. It was more about how the management handled the disclosure of the accounting change, and that was not well-received by the Street. So I think that's more of a management-credibility issue.

I think in the case of Equinix and InterXion and Telecity, which is more colocation - smaller amounts of space and power - their data centers are differentiated by the high degree of connectivity or network choices they have in there, and we continue to...

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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