Friday, October 29, 2010
>>Global shipments rose 14.6 million to 340.5 million units according to Framingham, Massachusetts-based IDC. Strategy Analytics pegged them lower, at 327 million units, noting that the rate of growth slowed from the first half as component shortages trimmed sales.
The analysts’ totals and market share figures differed because IDC counted a larger number of handsets for the “other” category, which included new vendors in Asia.
>>Global handset shipments rose 13% to 327 million units in the third quarter, according to research firm Strategy Analytics.
- The report noted that Nokia (NOK) lost share in the quarter, shipping 110.4 million handsets, up 2%. It was the ninth straight month the company had below average growth. Nokia’s market share fell to 34%, from 37%. Nokia’s handset ASP was up 2% to 64 Euros, the first increase in at least a decade, as smart phone units increased.
- Samsung shipped 71 million units, up 19% form a year ago. The Korean firm had 22% market share, up from 21% a year ago.
- LG shipped 28.4 million handsets, down 10% from a year ago, as it suffered from a limited selection of smart phones.
>>Sales of mobile phone handsets rose 19 percent from a year earlier to 71.4 million units, helped by the launch of the Galaxy S and Wave smartphones.
Thursday, October 28, 2010
>>Oakwood Hospital and Medical Center in Dearborn this week began offering the CyberKnife Robotic Radiosurgery System, just one of three Michigan hospitals to have the noninvasive cancer-fighting technology.
>>The firm's 2011 forecast was a positive surprise. Equinix is now guiding for revenue of $1.5 billion and $675 million in EBITDA, which is ahead of consensus expectations although still slightly below our projections. The firm's pipeline seems to be very healthy and Equinix has seen an uplift in bookings since the quarter ended. As we mentioned in our last note, pricing is holding firm. Monthly recurring revenue was up across the board, and the firm is realizing the synergies from the Switch and Data merger at an accelerated rate. We will be interested to hear more about the firm's 2011 strategic agenda on its analyst day Nov. 11 (specifically, what it plans to do with the cash on the balance sheet), but we remain confident that Equinix's and the industry's long-term growth prospects are intact.
>>An estimated 1.1 million patients were treated in 2009 with radiation at 2,170 radiation therapy locations in the U.S., which represents a 15 percent increase from just more than 954,000 patients, for an annual average increase of about 7 percent compared with 2007, according to research published by IMV Medical Information Division.
The top three cancer site types treated with radiation are breast, prostate and lung cancer, which account for 24 percent, 20 percent and 12 percent, respectively.
The IMV report also found:
>>** Saint Francis Hospital of Memphis plans to acq a CK too. If both CKs are installed, Saint Francis's would be the 4th CK and Baptist Memorial's the 5th CK in Tennesse.
The Commercial Appeal, Memphis TN
By Toby Sells
October 27, 2010
Baptist Memorial Hospital-Memphis aims to purchase a CyberKnife surgery suite in a project that would cost $7.54 million, according to government documents.
The hospital filed a letter of intent with the Tennessee Health Services Development Agency this month to buy the robotic, knife-and-scalpel-free surgery system that is used to remove certain cancerous and non-cancerous tumors.
The CyberKnife Robotic Radiosurgery System uses beams of high-dose radiation to remove tumors anywhere in the body including the prostate, lung, brain, spine, liver, pancreas and kidney.
Letters of intent are typically turned into formal requests to the agency the following month, when it would give the project an up or down vote.
Should the hospital be allowed to buy the CyberKnife system, it would make room for the device by removing an existing linear accelerator. That space would then be renovated for the new system, according to its letter of intent.
The board allowed Saint Francis Hospital-Memphis to purchase a CyberKnife system in July 2008 in a $6.7 million project.
Wednesday, October 27, 2010
>>The Benchmark Company is out with a research report this morning, where it reiterates its Buy rating on Equinix Inc.; it also raised its price target to $95.00, from $83.00.
The analysts cited the company's recently announced quarterly guidance, which now matches their estimates from before the pre-announcement. After hours, Equinix traded to $80 per share, representing 8x 2011E EBITDA and 9x 2011 recurring free cash flow.
The analysts said, “Equinix guidance and industry trends indicate that growth could average 20% for the next few years. As such, the stock appears attractive. Our price target rises from $83 to $95 per share, or 9x 2011E EBITDA.”
>>- Cowen reits Outperform noting quarterly revenue and EBITDA results were slightly above reduced guidance Equinix issued on October 5, however they were more encouraged with initial 2011 revenue and EBITDA guidance of >$1.500B (Street: $1.491B) and >$675MM (Street: $660MM).
- Deutsche reits Buy and $100 target saying their overall takeaway from full 3Q results is that this should help investors begin to get more comfortable that the 3Q miss was company specific and fixable. The company did a good job on the call providing further clarity into the issues (churn, pricing) and provided 2011 guidance that was ahead of expectations. As a result, they are raising their forecasts and reiterate their Buy and $100 target.
- Morgan Stanley is a bit more cautious on the name saying that despite better than expected MRR / cabinet results, they see risks to 2011 EBITDA guidance on higher churn (set to average 2.7% in 2H) and expense pressures. While management's plan to address SDXC was encouraging, they believe that efforts may be in their early stages, with a turnaround unlikely until mid-2011.
- Piper reits OW & $110 target noting Equinix is beginning to make the transition from a high growth company to one focused on balanced growth and free cash flow generation. They believe management is now focused on free cash flow generation with growth layered on top. As the firm noted in their October 21 note ("What Is Equinix Worth?...), they estimate that valuing the free cash flow generation could yield to a 2012 valuation of $108.
>>It sold over 1,600 for the three month period, excluding Switch & Data, compared to less than 1,200 in the second quarter.
The company mentioned cross connect activity was particularly strong in New York and Washington, which I would imagine is coming from the many financial traders and market data providers located at its NY4 building in Secaucus, as well as from the credit card companies, consulting firms, and popular websites located at the DC2 building in Ashburn.
They don't call him coach for nothing. Equinix CIO, Brian Lillie, recently attended a San Francisco Giants postseason game against the Philadelphia Phillies and it got him thinking. About what? The World Series? Sure, the Giants were fortunate to advance and will play the Texas Rangers. Brian came up with his own Octob...er classic: "What CIOs can learn from postseason baseball."
- Revenue for Equinix topped newly revised revenue guidance at $330.3m in the quarter and the company exceeded revised guidance for EBITDA. Equinix raised FY guidance for revenues and EBITDA slightly.
- Equinix's Q3 now fully includes results from the acquisition of Switch and Data
Washington, DC – Patients report decreased pain and improved breathing following treatment of their hilar tumors with robotic radiosurgery, but researchers say the therapy falls short of improving survival. Still, the study, conducted by researchers at Georgetown Lombardi Comprehensive Cancer Center, part of Georgetown University Medical Center, and presented today at the annual meeting of the American College of Chest Physicians in Vancouver, BC, represents the first of its kind to document the use of radiosurgery for hilar lung tumors and presents a novel therapy option.
For the study, researchers reviewed the medical records of patients diagnosed with inoperable primary and metastatic hilar lung tumors. Hilar tumors abut or invade the mainstem bronchus. All the patients in the study were treated with five courses (30 to 40 Gy in 5 fractions) of radiotherapy using CyberKnife at Georgetown University Hospital. Imaging studies with a combined PET/CT scan were performed at three and six-month follow-up intervals to track tumor progression.
The record review included 24 patients -- four with inoperable primary hilar lung tumors and 20 with hilar tumors that had spread there from other primary sites. The mean radiation dose administered to the esophagus was 27 Gy (ranging from 11 to 40 Gy) and mean radiation dose administered to the mainstem bronchus was 45 Gy (ranging from 30 to 50 Gy).
At one-year, the overall survival rate was 61 percent and local control (ability to keep the tumor from growing) was 71 percent. The review found that most deaths were attributed to the spread of the patients’ cancers. However, there was one death that was attributed to an opening in the mainstem bronchus in a patient who was previously stented.
While no uniform data was collected from patients about quality of life at the time of their treatment, the study’s lead author says the patient records reflect comments made by patients about their symptoms.
“Patients reported improvement with coughing, breathing, and they reported less pain,” said Brian Collins, MD, a radiation oncologist with Lombardi and lead author of the study.
“Our study suggests that CyberKnife is a palliative treatment option for hilar lung tumors,” explains Collins.
“We’d like to investigate outcomes with increased radiation doses to see if we can improve local control and overall survival rates. And we’d like to study the impact of administering a drug to make the tumors more sensitive to radiation.
“This is an important first step that gives us a new option to treat potentially morbid hilar tumor,” Collins concludes. “Future studies would likely involve drugs to make the tumor more sensitive to radiation.”
Collins is a compensated speaker for ACCURAY, the maker of the CyberKnife.
>>The expectations multiple is at work again this afternoon, with Equinix shooting up 7% to over $82 after hours after revenue came in 4/10th of one percent over the midpoint of the guidance range it gave three weeks ago. So it lost over a third of its value after guiding down 2%, and has gotten 7% back after coming .4% higher, an expectations multiple of around 17 in each case.
Wall Street is simply not able to handle the fundamentals of the data center industry calmly.
Tuesday, October 26, 2010
Read more at www.siliconbeat.com.
>>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.
>>Citi Investment Research sees nearly $20 in upside in shares of Equinix, Inc., as the company it set to report earnings next Tuesday after the bell. It has a $94 price and a Hold rating on shares.
In a note to clients, Citi writes, "We maintain our Hold rating given our expectations for an absence of meaningful acceleration in revenue growth during 2H/10, our outlook for slower pro forma revenue growth during ‘11 of 14-15%, & the uncertainty for EQIX to slow the rate of capital reinvestment in the domestic segment to increasingly focus on cash flow generation. We may revisit our thesis on EQIX to the extent: 1) visibility improves for the pace of churn; 2) revenue growth increases from the SDXC assets; & 3) EQIX retains its discipline on price & reduces the rate of capital reinvestment in the U.S. until the sales strategy can show success at accelerating the level of booking activity."
>>The notion that distance doesn't matter when it comes to cloud computing is a misguided one according to new research from Forrester. Ignoring geographic issues may be "perilous" for corporate customers warned the company in a new report, Infrastructure-As-A-Service (IaaS) Clouds Are Local And So Are Their Implications
Forrester's advice on cloud computing is to "Think globally but act locally" and bear in mind privacy laws pertaining to different countries. It said that cloud computing hype "is far from reality" and companies going down this route should pay close attention to where data centres will be situated.
AuntMinnie.com deemed the CyberKnife VSI System as the winner in the Best New Device category of the "Minnie Awards"!
AuntMinnie.com deemed the CyberKnife VSI System as the winner in the Best New Device category of the "Minnie Awards"!
>>Equinix did make a point in its warning call about the desirability of customers who buy cross-connects with their cabinets. Now it didn't say which kind of cross-connects it likes best - high revenue extended cross-connects, cross-connects between cages, or higher-bandwidth fiber cross connects - just cross connects. I agree with where they're going with this though. Plenty of companies can build data centers, but few can match the network connections that have accumulated inside existing Equinix (and Switch & Data) buildings. This is why we here the cringe-worthy term "network density" constantly from co-lo providers. That catchphrase is the new, updated version of "network effect", which got a lot of play in the 90s after Ethernet creator Robert Metcalfe starting mesmerizing audiences with the concept.
Monday, October 25, 2010
Equinix (EQIX) will be reporting 3Q 2010 results on Tuesday, October 26th.
According to this update, third quarter revenues will be in the range of $328.0 to $330.0 million, and adjusted EBITDA greater than $140.0 million (better than expected).
As we mentioned, most investors quickly took the exit door after Equinix's management seemed to indicate that growth wasn't as strong as expected, and some price concessions were necessary to secure long term contracts with key customers.
Institutional investors seem to have behaved more cautiously, and so far only one institution owning more than 5% of the Company filed a reduction in ownership, with other funds like Goldman Sachs and Bamco apparently still holding their shares.
We still believe that, in spite of a few problems, the fundamental positive trends for the sector and the Company are still in place, as expressed by Equinix in their recent filing “Responses to Questions Pertaining to Business Outlook” that followed the post warning conference call.
Investors confidence will probably take some time to restore, and execution will be closely followed in the next few quarters.
The Company will also address growth expectations as it will release a first forecast for 2011, on the conference call following the earnings release.For a recent research on colocation trends, you may also refer to TeleGeography’s “Colocation Capacity Struggles to Keep Up with Demand”
There will be several metrics under scrutiny by the investing community at this call. Among them, weighted average recurring revenue per cabinet, which has been growing steadily in the last few quarters, and might be an important indication of price stability in the sector.
For those of you interested in tracking the most useful metrics for this sector and this specific Company, we have compiled an interactive spreadsheet which is available, in partnership with Data Center Knowledge, at this link.
We will also be closely monitoring guidance and sales results, for confirmation that the warning was just an unexpected road bump, and we believe that a few data will show a positive trend, as the Company continues to execute its integration of Switch and Data and improves margins in the acquired entity:
According to management’s comments in the last conference calls, Switch and Data’s Adjusted EBITDA performance has already improved, and Equinix is still targeting 50% Adjusted EBITDA margins in the long term for the combined Companies.
While we remain optimistic about the long term prospect for Equinix, it is important to underline that some analysts share several concerns about the Company, as expressed for example by Morgan Stanley's analysts Simon Flannery and Edward Katz, here reported by MySmartTrend:
"Although management sized the potential impact of turnover at 25% of the base in North America, visibility on customer vertical and geographic mix remains lacking. Additionally, integration issues surrounding soft Switch and Data bookings are unresolved. Unlike consensus, we continue to believe that FCF burn is likely through 2011. Despite the stock's valuation (apart from the credit crisis) at historical trough levels of 7.3x our 2011E EBITDA, we view EQIX as a show me story."
Full article at Data Center Knowledge.
>>Morgan Stanley analysts remain concerned that Equinix Inc.'s revenues could slow materially given substantially higher churn risk from large customer deployments outside of key ecosystems.
Analysts Simon Flannery and Edward Katz said, "Although management sized the potential impact of turnover at 25% of the base in North America, visibility on customer vertical and geographic mix remains lacking. Additionally, integration issues surrounding soft Switch and Data bookings are unresolved. Unlike consensus, we continue to believe that FCF burn is likely through 2011. Despite the stock's valuation (apart from the credit crisis) at historical trough levels of 7.3x our 2011E EBITDA, we view EQIX as a show me story."
The bank maintained its equal-weight rating on the stock. Morgan Stanley sees fiscal 2010 EPS of $1.01, vs. consensus estimates of $0.95 per share, and fiscal 2011 EPS of $2.17, vs. consensus estimates of $2.25 per share.