Saturday, December 11, 2010

Harbour IT Expands Cloud Services Offering with Equinix

SYDNEY, AUSTRALIA — December 9, 2010 Equinix, Inc. (Nasdaq: EQIX), a provider of global data centre services, today announced that Harbour IT, a leading information technology services company providing infrastructure, managed services, and cloud computing solutions, is expanding its presence within Equinix’s Sydney International Business Exchange™ (IBX®) data centre to satisfy increasing customer demand for its cloud offering.

“We made the decision to increase our cloud capability due to growing demand,” said Adam Simpson, national cloud services manager at Harbour IT. “Harbour IT offers customers a choice - a reliable cloud-based Infrastructure as a Service as well as support for stand-alone systems and equipment on a cloud platform.”

Harbour IT selected Equinix because of its reliable and secure data centre facilities that enable the delivery of highly available services to end-users.

“Harbour IT’s presence within our cloud ecosystem, including more than 50 networks and interconnection services in Sydney, optimises performance and creates opportunity to sell their solutions to a diverse range of Equinix customers,” commented Darren Mann, managing director, Equinix Australia. “Platform Equinix provides the global presence, network density, and direct marketplace community that delivers an optimised end-user experience.”

Cloud Service Provider Cyso Consolidates Data Center Operations at New Equinix Data Center in Amsterdam

Amsterdam9 December 2010 Equinix, a provider of global data center services, today announced that Cyso, a Dutch provider of cloud services, has moved its operations into Equinix’s fourth International Business Exchange (IBX) data center in the Netherlands (AM2). The IBX data center officially opened today at the company’s grand opening event.

Cyso, one of the first ISPs in the Netherlands, recently decided to move its data center operations into Equinix’s state of the art AM2 IBX data center to expand its offering to encompass cloud services. Cyso selected Platform Equinix to offer its services on a global scale, allowing it to meet the needs of customers, no matter where they reside.

“The advantages of relocating to Equinix go way beyond access to highly resilient data center services, for example, the real Equinix value-add comes from its global footprint of data centers,” said Paul Bankert, Manager Business & Software Development at Cyso. “We have aggressive plans to expand internationally and are now confident we are best positioned to support this growth.”

In addition to global reach, Cyso can optimize the delivery performance of its cloud services with access to more than 45 carrier networks, as well as direct access to AMS-IX the world’s largest single metro area Internet exchange. Through the Equinix ecosystem, Cyso can cross-connect to these carriers in just a matter of hours, enabling it to grow its network quickly and easily to match customer demand.

“We continue to experience strong demand for our data center services in Amsterdam and we are pleased to meet the needs of Cyso’s expansion into cloud services,” said Michiel Eielts, General Manager of Equinix, Netherlands. “Through our unique global platform, our customers have access to rich ecosystems of potential partners and customers, enabling them to connect with other leading companies and maximize their business opportunities.”

AM2 is Equinix’s fourth data center in the Netherlands, the second phase of which was completed in Q3 2010.

Remodel on extensive optical data process center – Equinix El Segundo CA.

Benchmark Sees Strong Outlook On Equinix


>>Benchmark has published a research report on Equinix Inc. as the company has a solid growth outlook and rising sector values, according to Benchmark.

In the report, Benchmark writes "Equinix has a recurring revenue model with solid prospects for sustained growth. Equinix' communications real-estate service enables its customers to save money while outsourcing the location of their servers and related equipment. In addition, Equinix offers efficient connectivity with its tenants' operating partners. We forecast 2011 revenue of $1.5 billion for 16% y/y organic growth. Our EBITDA projection of $678 million reflects 19% organic growth. Management has consistently invested in data center builds citing strong demand trends. 2011 capex guidance, however, indicates a slowing in build plans and could unlock free cash flow. Our current estimates of 2011 recurring and after all capex FCF are $8.86 (10% yield) and $1.70 per share."

Benchmark maintains its Buy rating and $95 price target.

we're back

Due to a short trip abroad, the blog was quiet in the last few days. Back to normal.

Monday, December 6, 2010

Activ to open ticker plant at Equinix Toronto data centre

Activ Financial, a global provider of fully managed low-latency market data solutions, today announced the launch of its low-latency ticker plant at Equinix's TR1 International Business Exchange (IBX) data center on Front Street in Toronto.

"The Toronto market has seen great growth over the past few years, and expanding our presence in this important market is the next logical step for ACTIV," said Frank Piasecki, President and Co-Founder of ACTIV Financial. He continued, "We have seen strong demand for lower latency feeds from our Toronto-based clients, and we are opening this new direct ticker plant to service the growth in feed requests in this marketplace."

ACTIV clients in Toronto will have access to ACTIV low-latency consolidated global feeds coming in from 20+ data centers around the world, as well as access to direct Canadian ATS feeds, including TMX, MX, Alpha, Chi-X, Omega, and Pure. The service also offers a powerful API, as well as more than 50 existing ISV partners.

Mr. Piasecki said, "ACTIV always seeks to give customers a range of connection options through co-location to direct connections at cost effective price points. Partnering with Equinix in Toronto will allow us to bring our exemplary offering to our clients in Canada as well as other clients looking to leverage collocation to the Canadian markets. We look forward to continuing to expand our Canadian operations while maintaining our level of unmatched client service."

Equinix's Brown: Where You Store Your Cloud Data Matters


>>At the recent Cloud Expo 2010 in Santa Clara, Calif., TMC’s Erin Harrison had the opportunity to interview Equinix’s director of vertical marketing, Darryl Brown.

The company considers itself an enabler in the cloud space. Brown noted that the company is “the world’s largest data center provider,” saying that they facilitate their customers by allowing them to build their clouds in data centers. This “puts them close to the carrier backbone, which basically gets them much closer to their end users, improving the performance of their cloud,” and it puts them closer to any partners they may have for mashups.

Pihana's lawsuit


>>Two years ago, former Gov. George Ariyoshi and others filed a lawsuit seeking as much as $725 million for what they said was an invalid 2002 merger involving the high-technology company Pihana Pacific.

But now Ariyoshi and his fellow plaintiffs, including the University of Hawaii, must pay $3.4 million in fees and costs to the attorneys who represented the companies named in the suit.


Although the civil defendants deny wrongdoing, the merits of the lawsuit were not litigated because Judge Trader dismissed the case. He essentially found that the suit, filed six years after the merger, came too late under the statute of limitation laws of Delaware, where Pihana was incorporated.

Immersion Corporation Three Year Forecast

One of the most entertaining exercises we enjoy every year around this time is to look back at our previous modelings for Immersion Corporation (IMMR).

Just referring to our Seeking Alpha articles, we started covering Immersion back in 2009 with the article “Immersion Q1 Forecast: Can It Bring Great Potential into Actual Revenues?”.

We are obviously still waiting for the Company to reach its inflection point, but nevertheless we decided to share with you our new forecast, so that, at least, as readers you can also enjoy the fun of looking back, in a few years, and say: “how wrong those guys were” (more seriously, we still believe Immersion could eventually turn into a decent investment, especially since the Company moved to a licensing model only. Realistically, it looks like it will take a few more years to reach a revenue level translating into good profits, assuming decent execution by management and increased adoption of haptic by new sectors/licensees).

A quick look at past performance:

For Q4 2010 we used the mid point of Company's guidance, although we believe Immersion could achieve a better result than forecasted.

What the chart seems to suggest is that Immersion can not be really considered a growth story, and that revenues are actually declining in 2010, after a good start in Q1.

Those of you who know the Company understand that Immersion moved to a different business model in 2010, so that a better view of its performance is given by this chart:

Q1 is usually a stronger quarter, due to seasonality, and Q2 2010 saw some additional revenues as gaming licensees adjusted their royalty reports.

Year-to-date, Immersion's royalty business has grown about 75%, compared to 2009, while the discontinued product business has decreased by more than 30%, putting a large shadow on the Company's overall performance.

Going forward, there are a few positive trends that should allow Immersion to keep growing its revenue stream nicely.

The high adoption rates of smart phones worldwide will certainly represent the key driver for the Company's growth in the short period, given the relationships with Samsung (SSNLF.PK), Nokia (NOK) and LG (LGERF.PK), just to mention some key licensees. Tablets, like Samsung's GALAXY Tab, will add an additional revenue stream soon, as well casino gaming, as 3M (MMM) recently started, for example, producing a haptic roulette.

We also expect royalties from semiconductor partners - Companies like Atmel (ATML), Cypress semiconductor (CY) and IDT (IDTI) - to reach a decent level going forward, and longer term the Automotive sector should start benefiting from the implementation of haptics into several new models through the Visteon (VSTO.PK) partnership (2012, at least).

It is interesting to turn our attention to the latest investors presentations made by Immersion. We refer, in particular, to the sheet highlighting the long term business model.

This sheet is taken from Immersion's August presentation to investors.

We highlighted two data: 2010 Revenue and 2012 Adjusted EBITDA (forecasted).

The Company recently announced that it will most probably exceed the high range of its annual guidance, so that revenues for 2010 are expected to be around $ 31 Million (assuming the midpoint of Q4 guidance).

It's more interesting to look at what the Company was forecasting for adjusted EBITDA as a percentage of revenues (10% to 20%).

If we just turn to the same sheet on the November presentation, the Company seems comfortable in providing better numbers to investors:

As you may notice, Immersion is now forecasting Adjusted EBITDA to reach 30% to 35% of revenue in 2012, and Net Income of 5% to 20%.

Forecasts certainly don't commit management to achieving success, but we like to read into these improved numbers a deeper analysis of Immersion's cost structure, that should remain quite stable going forward, given the business model, and some improved expectations on the revenue side.

After all, Immersion has been growing since it was founded, although it hasn't been able, so far, to turn its intellectual property (IP) into a profitable Company, something that a licensing model, with 95% margins and growing revenues for improved adaption of haptics, might allow, within a couple of years.

Time to polish off our crystal ball – unfortunately the same that has been wrong so many times in the past about this Company.

Assuming Immersion achieves about $31 Million in revenue for 2010, the portion attributable to royalties, and products sales related to reference and design packages, demo solutions, etc. should be roughly around $ 27 Million.

While we do not believe that Immersion can keep growing royalties at a 75% rate in 2011, we think (hope) that a possible target to achieve in 2011 could be around $ 35 Million, with the increase driven by mobility, with tablets playing an interesting additional revenue stream in the category, chip partnerships, and a full year of medical simulators royalties.

Growth would still be a two digit number, compared to 2010, something Wall Street would appreciate, and such a sustained organic growth would nicely position the Company for 2012, when we hope that additional revenues might mature from other verticals, especially automotive, where just a few model wins could insure good royalties, and from increased royalties per unit in mobility (wider implementation of HD haptics effects).

Here is a quick look at our forecast for revenue (in $ Million):

It's probably useless, at this stage, to try to calculate what this could mean in terms of Adjusted EBITDA or profit in the next few years, as the main question with Immersion is and has always been if the Company can achieve a sustained revenue growth through adding new licensees/verticals, and by getting higher royalties per unit.

Any multiple used in this positive scenario would probably show that there is room for achieving a two digit stock price.

Our capacity to forecast short term action is even worse than our long term modelings. In line with the purpose of the article (let you have fun on our back in the future), we will also add that there seem to be a ceiling on the value of Immersion's stock, at the moment, at about $6.

Ramius, an activist fund that now owns about 13% of the Company, has recently been a seller above this limit, cutting its stake by a few percentage points in the last few months.

With a cost basis of about $4, it makes sense to take a 50% profit, although we believe that there might be another reason for this behavior.

Ramius has recently taken positions in a few turn around stories, like Immersion, mostly to obtain seats in the Board of Directors and push for a sale of the Company.

This hasn't really happened with Immersion, and we speculate that the BoD might prefer to try execute on the existing business plan, in order to maximize long term shareholder value, rather than position the Company for sale.

Assuming our view is correct, time will tell if this behavior does represent another sign that Immersion may be finally close to turning the corner.

NYSE Euronext 2011 Frankfurt Networking Event

For our 5th anniversary, we - and our sponsors Equinix and RTS - are proud to once again invite all of you to our now well known NYSE Euronext 2011 Frankfurt Networking Event!

Invitation extends to all market professionals in Fixed Income, Equity and Commodity Derivatives as well as Cash Equities (Fund Managers, Traders, Brokers, Sales, Equity Analysts, Back Office, Clearing, Risk Management, IT functions and Service Providers).

Please inform colleagues and business partners, also from outside Germany to make this the most diverse and valuable event possible for you and them.

Format is as follows:
- 11:00 - 18:30 : various sponsor and product presentations (tbd)
- 18:30 - 03:00 : networking cocktail, exclusive show and party

Please register via Xing, LinkedIn or mail, and forward us details of colleagues and clients you wish to bring along.

We expect to be fully booked and will filter entries so don't wait till the last minute...