>>TWST: What about Equinix (EQIX). What's your rating on them right now?
Mr. Breen: We have a "market perform," although our ratings are relative to the stocks we cover. For me, I think Equinix is a good company, it's just a matter of if I think it will go up as much as something else in my space. I think that they're uniquely positioned in the data center space. They've been building out significantly over the last couple of years, and I think that the demand for their product, pure collocation, will continue to be strong, given what we are looking at right now in terms of bandwidth demand. It's always hard to tell what's going to happen three or four years out, but at some point, the top line will start to slow, either because they'll build out less or they'll see some pricing pressure, at which point they should be able to generate some decent cash flows.
TWST: They added quite a number of facilities in different markets here in the U.S. with the Switch & Data acquisition. Was that a good strategic buy for them?
Mr. Breen: I think there were a couple of things going on. I think they were trying to protect that asset from falling into the hands of someone that maybe had deep pockets in terms of cash, allowing another competitor to come into the market. I think that was part of the motivation there, and I think part of it was they had a good Tier 1 market data center presence, and Switch gave them some additional data centers in areas where they weren't. It becomes a buy-versus-build decision ultimately, but I think they felt as though some of the Switch data centers weren't yielding as much on a revenue basis as they could have, and under their model they can yield more. I think they felt there were some synergies there in terms of the revenue per square foot that they can take advantage of.
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