Friday, May 1, 2009

Immersion Annual Meeting of Stockholders

some highlights from the filing (chapeau on the compensation reduction...):
The Compensation Committee’s recommendations regarding executive compensation in 2008 and 2009 took into account these management changes as well as our performance, the current global economic recession and the widespread concern over executive pay. As further described below, at the beginning of 2008, our executive compensation as a whole ranged from the 25 th to 50 th percentile relative to a peer group of medical device and technology companies of similar size and revenue. With the significant changeover in management, the Compensation Committee recognized the need to recruit the necessary talent for us to execute on our growth strategy and made decisions to provide competitive packages to achieve this goal, while at the same time focusing a significant part of these packages on long-term incentives to align the management team with the interests of its stockholders. As the macro-economic climate declined and began to affect our financial results, the Board, at the recommendation of the committee, took action in early 2009, freezing executive salaries at 2008 rates and instead chose to incentivize the executive team with long-term incentives, which is discussed further below. Further, in March 2009, Mr. Richardson, recognizing the need to reduce costs in the extraordinarily tough business environment, voluntarily reduced his base salary by 12% and reduced all other executive’s base salary by 5%.

The following table sets forth as of April 15, 2009, certain information with respect to the beneficial ownership of our common stock by (1) each stockholder who is known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, (2) each of our directors, (3) the Named Executive Officers, and (4) all directors and executive officers as a group. Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided; in computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.
Subject to
Amount and
Nature of
Included in
Percent of
Beneficial Owner
Ownership(1) Ownership(2) Class(3) (%)
Mazama Capital Management(4)
3,097,090 11.1
H Partners Management, LLC(5)
1,500,000 5.4
ValueAct SmallCap Master Fund, L.P.(6)
1,413,503 5.1
Executive Officers and Directors
Clent Richardson
190,372 182,812 *
Victor Viegas
1,161,209 (8) 1,151,625 4.0
Stephen Ambler
158,127 158,127 *
Richard Vogel
Anne DeGheest
57,000 (8) 32,500 *
John Hodgman
68,250 (8) 63,750 *
Emily Liggett
39,626 (8) 33,126 *
Jack Saltich
78,250 (8) 73,750 *
Robert Van Naarden
68,250 (8) 63,750 *
All named executive officers and directors as a group (9 persons)(7)
1,821,084 1,759,440 6.1

T1R Insight: Equinix and interconnection revenue

from Tier 1 Research daily newsletter:

>>T1R has recently been hearing some criticism of Equinix in regard to its interconnection situation –
although its number of ports and cross-connects continue to grow, the revenue it is getting from those interconnection services looks less impressive than it did in the past. T1R thinks that this is much .....

Google container data center tour

from Youtube:


Internap has come out with its notice of 2009 annual meeting of stockholders and 2008 annual report.

Giannio, on the IV MB, has already selected the most valuable infos out of them:

bye bye poison pill

from the proxy statement filed today:

In April, 2007, the Board of Directors instituted a Preferred Stock Rights Agreement. Because Shareholder Rights Plans (typically known as poison pills) dramatically alter the balance of power between shareholders and the Board of Directors, it is important to put safeguards in place to protect against the Board supplanting the rights of the shareholders.
The current poison pill has several provisions that are not in-line with current best practices. First, it has never been subject to a vote of the shareholders. Second, the flip-in percentage of 15% is too low, effectively preventing shareholder’s from gaining enough shares to influence the governance of the Company, and therefore adversely shifting the balance of power between the Board of Directors and shareholders. Third, the 10 year sunset provision is too long. The provisions in this proposal would bring any future Shareholder Rights offerings into compliance with current governance best practices, such as those recommended by the RiskMetrics Group (formerly known as Institutional Shareholder Services, Inc. or ISS).
To correct these deficiencies, we propose the Board of Directors terminate the current Agreement and put provisions in place to make sure that any future rights plans are in-line with current best practices. If the TIDE Committee of the Board of Directors feels that it is still in the best interest of the shareholders, and other relevant parties, to have a rights agreement in place, it should place a proposal for a new rights agreement that meets all of the criteria of this proposal on the proxy for this year’s (or a future) Shareholder meeting. This would bring the rights agreement into compliance with current best practices and concurrently allow shareholders to vote on the matter.

cooney letter from 2008 annual report

Since joining the Internap team several weeks ago, one of the most frequent questions

I have been asked is, “What attracted you to join Internap?” My answer is simple: Internap

competes in compelling markets, serves a broad and diverse customer base and has a

unique set of assets to underpin a long-term profitable growth strategy.

Throughout our history, Internap has developed a reputation for delivering best-in-class technologies

and services. Building on our patented Internet route optimization technology, our customers have

access to IP services that are among the best-performing and most reliable in the industry. The

combination of our technology leadership and a world-class 24/7 customer support organization

enables us to deliver industry-leading, 100 percent service level commitments. We are successfully

leveraging these strengths across all of our business units: Data Center Services, IP Services and

Content Delivery Networks.

Of particular value in these challenging economic times is the Company’s strong financial position.

We ended the year with $54 million in cash and marketable securities, more than two times the balance

of our interest-bearing debt and capital leases. Internap has also proven its ability to generate consistent

cash to run the Company’s operations; 2008 cash from operations was $38 million, up 38 percent over

the prior year. These characteristics are important because they give us the flexibility to focus on the

operational and strategic drivers of sustained profitability.

Even in my short time with Internap, it is clear to me that the staff brings an extraordinary level of

dedication, commitment and professionalism to their roles. With this motivated team, uniquely

differentiated assets and growing markets, we are committed to deliver long-term profitable growth

for our stockholders.


J. Eric Cooney

President and Chief Executive Officer

April 30, 2009

Thursday, April 30, 2009

Switch & Data

a few highlights from Switch and Data conference call (from Seeking Alpha):


Over the past three quarters, George and I have shared with you the impacts we have experienced from the prevailing economic conditions. We have communicated that some customers have been delaying decisions. We also have had customers request ramps or stage implementations for their deployments. On these calls, we also spoke about the small and medium-sized customers who are more affected by the broad economic conditions. We saw this impacting increased churn and slower growth rates from this customer segment. More recently we have been seeing some change in growth dynamics. We saw improving demand and new orders improving from small and midsized customers.

Keith Olson

And Jonathan, on the aspect of our expected growth, we continue to see very strong demand in all of the regions, all of our geographic and in our vertical market segments pipelines and frontals.

Keith Olson

Sure. We don’t see it in the large deals category. We don’t any further degradation in the sales cycle, but we are not seeing any rapid change to what was a lengthening type of decision process. The improvement I was speaking to was in the small and midsize customer that seems to be more impacted in the middle part and later stages of 2008. At the end of 2008, of course we saw a significant new logo or new customer quarter for us. We also saw in the first quarter more demand from our existing customers that seem to have compress some of their growth through the latter stages of 2008. That’s the operating environment we saw the improvements on seeing the mid to small size customer. A couple of month's worth of data doesn’t necessarily provide a lot of data points. But I thought it was worth referencing because the three quarters we spoke about that group or that customer segment being the most affected and now we are starting to see not only net new customers in two good quarters or two healthy quarters of new logos but also demand from our existing small and midsize customers starting to uptick.

Keith Olson

Okay? Let me answer your first part of the question. We saw improving new sales February over January and March over February. So it’s a trend that was kind of a stepping stone of new sales and that’s where we saw some of the uptick from the small and mid size customers as well as the characteristics that we’ve been seeing with our builds being able to attract and address larger scale opportunities, both from our existing customers as well as net new logos a number of those over the period we have communicated about their wins.

Mobile phone shipments fell 13% in first quarter

LONDON (MarketWatch) -- Global mobile-phone shipments fell 13% to 245 million in the first quarter, telecoms consultancy Strategy Analytics said on Thursday. It was the fastest rate of decline in shipments since records began in 1983. All top five vendors sold fewer phones but among them Samsung performed best, with shipments down just 1%. Nokia's shipments fell by 19% from the year-earlier period.

TinBu Partners With NaviSite (NASDAQ: NAVI) For 5-Year Internet Hosting Agreement

TinBu Partners With NaviSite (NASDAQ: NAVI) For 5-Year Internet Hosting Agreement

The rapid growth of TinBu's interactive online content will now be managed utilizing NaviSite's world-class 16 enterprise class data centers around the world.

Pensacola, Florida 4/30/2009 12.00 GMT (TransWorldNews)

(Pensacola, FL) TinBu, a leading provider of interactive content channels to online publishers around the world, is pleased to announce they have entered into a 5-year contract with NaviSite (Nasdaq: NAVI ) to serve as the delivery pipeline for their patent-pending interactive content.

"We have seen substantial growth among web publishers who have choose to integrate our patent-pending interactive content channels into their web sites," said Bin Tu, TinBu's CTO. "As a result the demands on the technical backbone needed to deliver our content channels to our publishing partners around the globe has increased considerably. We plan on transferring our entire global content and ad distribution platform to NaviSite by May 12, 2009," added Tu.

NaviSite leverages a global delivery model with a presence across three continents. NaviSite has major data center facilities in Atlanta, GA; New York, NY; Syracuse, NY; San Jose, CA; Houston, TX; Vienna, VA; London, UK; and Delhi, India. Their 16 enterprise class data centers are spread across the US and the UK. NaviSite also has a Network Operating Center (NOC) in India. The NOC offers round-the-clock customer support for all core infrastructure management . The center supports all five managed services data centers in the U.S. and the UK.

Stephen Susnar, Senior Integration Director for TinBu, was responsible for negotiating the 5-year contract with NaviSite. "TinBu's content platforms is now live on several thousand Web-sites around the world, with a substantial amount of continued growth anticipated in the U.S., Latin America, Canada, and the EU throughout 2009 and 2010," said Susnar. "As our technology and content platform has been adopted by additional publishers month over month, we have seen the need to upgrade the delivery speed, performance, and global scalability of our technical delivery infrastructure. Moreover, as TinBu adds more demanding content channels to our platform, including live and archived video, audio files, and rich-media advertising options, NaviSite gives us exactly what we need to ensure flawless delivery. Most importantly our partnership with NaviSite ensures that TinBu's current and future publishing partners will see increased performance and the security of unparalleled reliability in terms of how our content platform and integrated advertising options perform 24/7 around the globe," added Susnar.

TinBu plans on transitioning to the NaviSite platform during the first two weeks of May, 2009. The changeover will be seamless to TinBu's current publishing partners, although they may notice even faster load times and interactivity with any of the TinBu content channels they are currently utilizing on their Web-sites.

About TinBu:

TinBu uses patent-pending technology to provide interactive data products to leading online and wireless companies worldwide. TinBu`s clients include AOL, AOL Latino, AOL Canada, AOL Mexico, Telemundo, MSN, MSN EspaƱol, MSNBC, USA TODAY, BellSouth, ATT, Media General, Inergize Digital Media, CBS Television, ABC Television, Fox Television, CBS Radio, Boston Herald, Boston Globe, Tribune, Toronto Star, CBC New Media, My Red Fish, Local Solutions Networks, Motricity, uClick, St. Louis Post Dispatch, Hello Metro, New York Daily News, DirecTV, Univision, Terra Networks, Yahoo!, People PC, New York Post, and many others. For more information visit them online at


from the Yahoo MB, post by crvcybr (S. Jose is the Equinix data center):

>>“DoubleClick for Web Video” Start-up FreeWheel Raises $12 Million
by Peter Kafka

FreeWheel is essentially an online ad video network operating behind the scenes and connecting Web video advertisers and publishers. If that sounds a bit like DoubleClick, the display ad infrastructure company that Google (GOOG) acquired last year, that’s not a coincidence. Co-founders Doug Knopper and Jon Heller are both DoubleClick vets.

Freewheel Media Inc. (AS26558) FREEWHEEL 26558
Freewheel Media Inc. (AS26558) FREEWHEEL 26558
FreeWheel Media Inc. INAP-NYM-FREEWHEEL-17497 (NET-63-251-28-0-1) -
FreeWheel Media Inc. INAP-SJE-FREEWHEEL-21133 (NET-74-217-66-0-1) -

Equinix Opens New Global IT Development Center in Singapore

P/R Asia related:

>>Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, announced the opening of a new global IT development center in Singapore on 29 April 2009. To support Equinix’s growing global business, which now spans 18 markets in North America, Europe and Asia-Pacific, the center will provide dedicated global application development support, database management and technical support services to all Equinix business units globally.

“As an industry leader dedicated to ensuring the vitality of the information-driven world, Equinix’s investment in this center represents our commitment to further strengthening our global IT capabilities that support the mission-critical data center and interconnection infrastructure Equinix provides for the world’s leading businesses,” said Brian Lillie, Chief Information Officer of Equinix.

Rear-Admiral (NS) Ronnie Tay, Chief Executive of the Infocomm Development Authority of Singapore welcomed Equinix's new expansion in Singapore. "Today, Singapore is recognized world-wide as a trusted hub for businesses looking to offshore their operations. The set up of Equinix's global development center will add to the vibrancy of our infocomm eco-system, increasing business opportunities and knowledge exchange between global and local enterprises. Local infocomm enterprises will now have the opportunity to partner and support Equinix’s global operations via the center."

Manohar Khiatani, Deputy Managing Director, Singapore Economic Development Board, congratulated Equinix for the new center’s establishment. “We are delighted that Equinix has set up its global development center in Singapore. With this, Equinix joins the growing number of companies managing their global functions here. Equinix’s investment also underlines Singapore’s position as a global IT hub, and is strong testimony to the quality of our IT talent and infrastructure.” said Khiatani.

“We selected Singapore for the location of this center based on its multi-lingual talent pool, its commitment to developing human capital and its leadership as an information technology hub,” said Lillie. “Singapore also has the largest customer base for Equinix in the Asia-Pacific region. We look forward to continued investment and growth in this important market.”

Equinix is hiring staff for the global IT development center locally, doubling the company’s IT headcount in Asia-Pacific. This investment will be in addition to the new US$45M SG2 International Business Exchange™ (IBX®) data center phase 1 expansion in Singapore, which is expected to open in Q3 2009, and the recently completed expansion of the company’s original SG1 center in Singapore. Elsewhere in the Asia-Pacific region, Equinix has recently opened a new SY2 center in Sydney, and it is building a fourth phase expansion of the existing HK1 center in Hong Kong, which is expected to open for customers in Q4 2009.

Telx opens Clifton, NJ datacenter

from Tier 1 Research daily newsletter:

>>Telx opens Clifton, NJ datacenter, adds 3.75MW of critical power to NY/NJ market

Telx opened its new datacenter at 100 Delawanna Avenue in Clifton, New Jersey, last week with a grand opening event complete with ribbon-cutting ceremony, industry panel discussions, facility tours and free food. The opening of the datacenter brings 3.75MW of additional (and much-needed) colocation datacenter to the New York metropolitan .....

Wednesday, April 29, 2009

Tier1: Higher Prices Ahead for Data Centers

from Data Center Knowledge:

>>“I think we’re going to see data center prices increasing significantly in the third and fourth quarter,” Golding said Tuesday in his keynote at Tier1’s first Datacenter Transformation Summit in Herndon, Va. “We think we’re going to see 7 to 10 percent price increases annually until credit eases, plus another 18 months (to fund and build new data centers). This is good for providers but not for enterprises. Now is the time for enterprises to lock in. There are lots of things you can get a discount on by waiting. Data centers are not one of them.”

Shepherd constructs state-of-the-art radiotherapy centre in London


Constructing one of the most advanced treatment centres in Europe, Shepherd is working in a deep basement with bunkers surrounded by the densest blocks available to control radiation. James Stagg reports.

The new building (pictured) could be no taller than the original five-storey structure so the building had to go deeper rather than higher.

When dealing with technology that delivers state-of-the-art radiotherapy for the treatment of tumours, construction quality and safety has to be of the highest order.

  • Start date: February 2008
  • End date: November 2009
  • Steve Kiene - Internap

    Steve Kiene has been with Internap since May 2008, according to his profile on Linkedin:

    Senior Director, Technology Engineering


    (Public Company; Internet industry)

    May 2008January 2009 (9 months)

    My team is responsible for getting things done.

    Vice President, Engineering


    (Public Company; INAP; Internet industry)

    January 2009Present (4 months)

    I am in charge of the software engineering teams at Internap. I am also in charge of our CDN strategy and vision, as well as future products yet to be announced.

    His description, in his own words:

    Steve Kiene’s Education

    • School of Hard Knocks

      Life, The real world, 19702008

      I didn't go to college. I didn't even bother to finish high school- I left to start a software company.

    We previously quoted a small article about him:

    Kiene and crew keen on new Web challenges

    What is interesting is that it seems that he writes on the Yahoo MB. The person under his nickname (steve_kiene) has written just a few posts so far, since 2006:

    If we look at some of his previous posts about Digital River (a company he sold his previous venture to), it might sound it's the real him:

    >>I have to be a bit careful here (I don't want to get sued by DR for talking about confidential things) because I know a lot about the DR-MSFT stuff. However, if I think about only what's publicly known here's what I think:

    Our two cents: employees of a public Company shouldn't be allowed to write on a public forum. However, here are his two Internap related posts so far:

    >>Anyone can announce that in the future they are going to support something.

    Internap already supports Flash Media Server 3.5 with it's DVR and multi-bit rate capabilities. It was released in production on the entire CDN on January 12, 2009.

    Silverlight Smooth Streaming capability was released in production on April 24, 2009.

    We generally don't talk publicly about what we might do someday. When we release something new, we make sure our customers know about it. That's how we're rebuilding our credibility in the CDN market.

    If anything comes from us in the mobile space, our customers will be the first to know.

    Down the road, I hope we'll have a level of credibility in the marketplace that allows us to pre-announce things and have it mean something. Under-promise and over-deliver is our focus.

    >>Internap fully rolled out Flash Media Server 3.5 the same morning it was announced by Adobe. We just finished rolling out version 3.5.1. I don't think anyone other than Internap has 3.5.1 in full production.

    A key point about going after medium-sized customer rather than very large customers- the margins are much higher with medium-sized customers. I'll take 10 medium customers over one large customer any day. Larger customers also require dedicated staff- something I don't see as the best use of our team at this time.

    "Bread crumbs" for Akamai are high margin customers that we can focus on and service very well.

    Tuesday, April 28, 2009

    Customers Make IT Easy With, Now Available in SaaS Mode

    St Albans, 28th April 2009 –

    Staff&Line, a European leader in IT management solutions, has announced today that its flagship product, EasyVista, a fully integrated software suite for IT Asset and IT Service Management is now available in a new version, EasyVista 2009, which comes in two options – EasyVista Classic and

    The platform is hosted by Equinix, one of the world’s leading datacentres (, with sites in Europe, the United States and Asia.

    Monday, April 27, 2009

    National Trust goes virtual to cut data centre power

    from CBRonline:

    National Trust should be able to slice its data centre energy consumption by 70% after signing a hosting contract for managed virtualised infrastructure services and disaster recovery.

    The organisation has signed a deal with eLINIA, a former unit of BT, to migrate physical elements of its existing infrastructure onto a virtual platform run on HP blades in a carbon neutral data centre.

    eLINIA’s carbon-neutral hosting service is based out of the Equinix data centre facility in Slough, UK which is powered by Slough Heat and Power Energy.

    Sunday, April 26, 2009

    Equinix 1Q 2009 results – a significant pickup in customers' bookings in March

    Equinix (EQIX) reported 1Q 2009 results last Wednesday night (see its Press Release and Seeking Alpha conference call transcripts).

    The Company matched guidance and analysts expectations as far as revenues, and exceeded its own EBITDA target and analysts' EPS estimates.

    An interesting comment, during the conference call, was made about “a significant pickup in the month of March” as far as bookings. While this was not described as a trend, yet, it is noteworthy that some confidence is showing up in the business, which is still growing, anyway.

    Some highlights on a few metrics we usually follow to better understand the Company's performance:

    • Revenues came at $ $199.2 million. Exchange rate negatively impacted the Company's 1Q revenues by $1.1 million, compared to the rates assumed in the guidance, and on a same 4Q 2008 constant rate, the negative impact has been about $ $1.8 million. Bottom line, guidance was not exceeded because of the negative effect of the exchange rate.

    • Europe revenues showed a 6% sequential improvement, while Asia-Pacific had a 10% increase over the prior quarter, in spite of the negative effect of the exchange rate just noted. In other words, on a same currency basis, the foreign subsidiaries showed terrific results, especially given the current economic climate.

    • Cash gross margins were 64%, slightly above the Company's own expectations for the quarter, positively impacted by continued fiscal discipline related to discretionary costs.

    • Churn rate was 1.5%. Later on we'll discuss in depth the forecasted increase for the next quarters.

    • 161 new customers in the quarter, a number very similar to last year (160), and a reversal of 4Q 2008, when this number (110, lowest for the year) was giving analysts some concern.

    • MRR per cabinets continued trending up, with a 2,3% Q/Q increase in the USA and a 4,6% Q/Q increase in Asia

    • a record 224 10 Gig ports (+22% Q/Q), and a peak bandwidth traffic on US GigE Exchange of 300 gigabits per second, a 17,6% increase over the previous quarter.

    • 650 cabinets added on a quarter end calculation in the USA and Asia (more about this metric later on)

    For the first time, the Company disclosed several metrics concerning the European subsidiary, which we will probably fully analyze in a separate article.

    More Equinix non financial metrics are available for download on their web site at this link:

    View Equinix's Non-Financial Metrics

    A solid quarter

    In our opinion, 1Q results were solid, and operating metrics mostly healthy.

    The market seemed to like the numbers, and the last part of the week saw a good share price appreciation.

    New coverage was started by Piper Jaffray & Co with a buy, and some positive comments:

    • Piper Jaffray & Co. initiates coverage on Equinix Inc. (Nasdaq: EQIX) with a Buy. Price target $75.
      Piper analyst says, "Equinix is the clear leader in its peer group. It is carrier neutral, meaning customers can choose from over 200 telecom providers, it is the only truly global provider, and it has created a network effect in its data centers that customers pay a premium for...Equinix has enough capital to expand its portfolio in '09 and gain further share, but it also has the discipline to pull back quickly in response to demand trends. Equinix could be a consolidator of attractively priced assets. The current management team has consistently met and beat expectations. Acquisitions have been prudent, and very well timed."

    On the other hand, Oppenheimer raised its price target to $ 67, but moved the Company to Perform as the risk/reward dynamics seemed well balanced to the analyst, Srinivas Anatha. This summary is taken from

    • Equinix (EQIX Quote) downgraded at Oppenheimer from Outperform to Perform. $67 price target. Valuation call, even though the company posted a strong quarter.

    Positive comments also came from the major web sites following the sector, like Data Center Knowledge and Telecom Rumblings:

    Telecom Rumblings

    Equinix Strides Easily Into Q2

    Colocation specialist Equinix (EQIX: chart, news) shrugged off the effects of the economy and posted some nice results.

    Overall, a solid quarter and a great lead in for the rest of the datacenter space.

    Data Center Knowledge

    Equinix: ‘Significant Pickup’ in March

    Colocation and interconnection specialist Equinix (EQIX) saw a “significant pickup” in customer activity in the month of March, as customers that had deferred decisions made commitments.

    Equinix said it was continuing to see strength in bookings from network companies and financial services firms with electronic trading operations. The company added 161 new customers in the quarter, and now has 2,384 customers leasing 44,500 cabinets. Smith said the company would continue to invest in expanding its facilities in key markets, and will be able to self-fund the construction.

    Expansion projects and cabinets addition in the quarter

    A few words on two very important aspects emerged during the call.

    Given the recent economic downturn, Equinix had very well explained, during the previous 4Q 2008 call, that the Company had a plan B in case it was necessary to reduce investments. This is not foreseen as necessary, right now.

    As we heard during the call:

    Stephen M. Smith - Equinix CEO

    We also mentioned that in our plan we had the flexibility of built-in circuit breakers that we could trigger on our spending should our results from the first quarter and visibility into the second quarter not develop as anticipated. With our first quarter results behind us and continued strong pipeline, we're on our way to hitting the objectives of our plan and see no need to trigger any of these circuit breakers at this time.

    We consider this one of the most important informations emerged during the call, as we believe that Equinix will enjoy a strategic advantage from the fully funded expansion projects that will, most probably, give the Company available inventory once the economy (and demand for colocation space) will increase, with very few new data center builds available (2010 and beyond time frame).

    Equinix will hold an Analyst meeting next May, 5th, and will probably announce future projects:

    Stephen M. Smith

    First, as you know, we have a number of expansions that are scheduled to come online in the later half of the year. As in prior years, the planned delivery of this capacity plays a role in our second half revenues. In addition, the back end nature of our first quarter bookings will have an impact on the timing of recognized revenue. A full quarter's value of this revenue will not be seen until the third quarter.

    Our 2009 CapEx guidance is also unchanged at $325 to $375 million, of which approximately $60 million is expected for ongoing CapEx. This range includes up to $90 million in unannounced expansion CapEx. We'll provide more color on this at our analyst day in a few weeks.

    We still believe Ashburn (Washinghton DC metro) and Silicon Valley may be good candidates for future expansion, and that it will make sense for the Company to acquire the ownership of the NY4 New York metro data center.

    Cabinets added in the quarter, in the US and Asia, were 650. This is a “controversial” number. It is probably the lowest one experienced by the Company in the last few years (with numbers normally over 1,000 new cabinets per quarter, ranging from 1,000 to 1,600). We have to go back to 2Q 2007 for a quarter with “only” 800 cabinets added. On the positive side, the Company did succeed in growing revenues nicely in spite of this negative number. We'll see how this datum will be trending in the next few quarters, especially as the expected targets should see Equinix increasing its Q/Q growth in the second half of the year of one or two percentage points, which would probably need going back to the previous, strong average number of cabinets added each quarter.

    Churn forecasted for 2Q 2009

    One aspect that was widely discussed during the conference call was the forecasted churn of a large customer in one of the Silicon Valley data centers, in the next quarter.

    Those of you who have been following Equinix closely in the last few years have probably gone back in time with their memory to the 1Q 2007, when the Company experienced a very high churn (in the range of 4% plus), mainly due to some large “wholesale” positions exiting their contracts.

    Let's have a closer look at what happened (from the 1Q 2007 transcripts):

    Keith Taylor - Equinix – CFO

    Moving to churn and as mentioned above our Q1 cabinet and MRR churn was higher than expected at 4.2% and 4.4% respectively, an increase over the prior quarter and higher than our ongoing guidance level. This churn reflected the impact of proactive churn as we continue our IBX in customer optimization efforts. This also included the decision by two customers to in-source their infrastructure. One of these customers will continue to maintain their peering relationship with us while the other customer we had expected their churn for some time.

    One of the customers involved at that time was Google, who had a very large footprint in Ashburn (Washington DC metro).

    Of course, this news was quite some shock, at the time, but when we analyze the situation, we do find a few very good reasons why this was a good move for both Companies, and did have a positive impact on Equinix in the long term.

    Google had negotiated a very good contract with Equinix, and was a prestigious and necessary anchor tenant for the data center, when signed. As Google grew up, it made perfect sense for them to build their own data center and exit their colocation contracts. As to Equinix, they are not in the wholesale data center business, the space was sold below market cost (and because of their server architecture Google was probably using 4 times the power used on average in that specific data center...), and they could very well sell the same space space to other (smaller) customers at higher prices and increasing the number of cross connects requested (higher margin business).

    Google did continue as a customer, as they need Equinix for their peering, and even expanded to other locations worldwide, which was also better balance of risk for Equinix, too, and attractive for the new centers (Google is the kind of customers that generates a positive domino effect).

    In the meantime, Equinix was also building a new data center in the same location, whose success was not really impacted by this event. The location had established itself as “the peering point to be at” on the East Coast, with most European Networks landing there, and customers did need to consider it for their mission critical infrastructure.

    We honestly believe we are facing a very similar situation. Even if we do not know the name of the customer, this legacy contract will free space that the Company can sell at twice the price, and the customer will probably remain linked to Equinix for what the Company does better, hosting their peering staff.

    As underlined during the conference call:

    Richard Fetyko - Merriman Curhan Ford & Co.

    I guess that just kind of prompted a couple other questions in terms of so you're saying the customer's in multiple sites and they're consolidating those multiple sites into their own location, so they're leaving from [inaudible] Silicon Valley data center from other sites as well?

    Keith D. Taylor

    No. I don't know what they're doing in other sites. I can't speak of what they might be doing with some of our competitors. What I can tell you is they're going to maintain a number of locations with us and in fact this same customer is going to build a new facility, new deployment with us, in one of our non-U.S. markets. So these things happen all the time. It's just of a size that we want to make sure that we telegraph it and it's going to cause us to be around the 2 percentage range on the quarterly churn in Q2 and Q3.

    But this is, again, a very good customer. It's very similar to the discussion point we had a number of years ago about our Google churn. They still are a very good customer of ours, Google, and the customer I'm referring to today is going to continue to be a very good customer with us and grow in multiple markets, just not in this particular market, with us. They're going to stay in our Silicon Valley 1 property, but they're going to relocate out of another Silicon Valley property.

    Stephen M. Smith

    Said differently, it's like Keith said, it's a server farm. It's a big deployment that was deployed here years ago that probably today we wouldn't even entertain taking. It's actually a good thing for us.

    We do expect that Equinix will probably have to work around the space left available, and, similar again to what happened in 2007, need some time before the space will be fully available and occupied by new customers (from the 2Q 2007 transcripts, available at Seeking Alpha):

    Keith D. Taylor - Chief Financial Officer

    Now, looking at sellable cabinet capacity and utilization levels, our net sellable cabinet capacity decreased slightly to 24,900 as we modified some of our large cage configuration that churned in Q1 to better meet change in customer needs, including increasing our DC prior distribution capabilities.

    Long term, a better and more profitable use of one of their Silicon Valley data center. Short term, this availability of cabinets will alleviate the problems in a constrained market and give the Company some more time before a new center is needed in that location, as we still expect that Equinix will consider a new built (or acquisition) before year end, with an obvious lead time before the new space is built/Equinized.