Wednesday, February 27, 2013

Immersion Partner News Highlights


Not All Data Center Stocks Are Created Equal

Read the whole post at Seeking Alpha: 

>>Last week Barron's analyst Tiernan Ray took a very critical look at the valuations some data center stocks have achieved on Wall Street:
Adjusted for Reality, Neither Rackspace nor Equinix Shine
As I said, the market last week punished Rackspace (RAX) for failing to live up to the loftiest expectations [the stock fell 20% post-earnings], largely because the nature of a REIT is to keep demonstrating Ebitda growth that will some day support massive borrowing, and fat dividends.
It's the same thing that has pushed down Digital Realty (DLR) and Dupont Fabros (DFT) shares of late.
The article ended with an Equinix (EQIX) related prediction:
In the meantime, given that this is all fantasy profit, Equinix shares will continue to trade based on whether they can deliver upside each quarter, however slight. If not, the pricey stock may face a bit of a Rackspace reaction.
We disagree with several conclusions in the article, but as we also believe that data center multiples deserve to be investigated and better explained to investors, we'll use Barron's analysis as a starting point to add our two cents.