Hot Sector, Cool Hand

from Barron's:

>>Talking With Michael Lippert, Portfolio Manager, Baron iOpportunity Fund

"Innovation" is a key concept for Lippert, and it's a word he uses often. "We want businesses that are high-growth, that are doing something really innovative, that have barriers around their business, and that are clearly taking market share and getting stronger," he says.

At the top of Lippert's list is Equinix (EQIX), which provides network-exchange facilities for cable and telecom networks. Lippert likens Equinix to an airport, since it helps speed data to intended destinations.

The iBaron Opportunity Fund first bought the shares six years ago, at 20. They were at $105 late last week, and still have room to run, he says, especially since Equinix keeps raising revenue guidance, as it did in the latest quarter.

Atmel up there with Cypress, Synaptics

a post by cellodude on the IV MB:

>>Atmel isn't small-time, not only are they in some high profile phones but they are going to be in Windows 7 touch netbooks next year, and also handheld gaming & GPS. See article below.

Looks like IMMR is graduallly gaining a foothold in all mobile platforms. Cypress & Atmel license IMMR, and Synaptics just premiered the Fuse demo with IMMR involved so they might sign too. Cypress expected to become #1 next year.

[Winners, losers in touchscreen IC market

Atmel, Cypress, IDT, Microchip, Renesas, Synaptics and others are selling touchscreen chips for handsets and other products. Synaptics was one of the early leaders for handsets, but Atmel and Cypress are coming on strong. The others are scrambling to get their foot in the door.

Based on current design activity, we expect Cypress to displace Synaptics and become the dominant supplier of touch screen chip solutions in 2010.

Samsung and LG are expected to shift their high end smartphone touchscreen chip designs to Cypress based solutions. We also expect Cypress to increase its footprint at Nokia and Motorola at the expense of Synaptics and Atmel respectively.'']

Energy-guzzling data centres on NEA radar

'Introducing guidelines for energy- efficient data centres in Singapore will definitely make it even more compelling for companies which want to set up operations here and the region,' said Mr Clement Goh, Singapore managing director for Equinix, a data centre firm which has two such centres totalling about 260,000 sq ft and using about 12 megawatts of power at full load.

Patent applications - IMMR

United States Patent Application	20090313542
Kind Code	A1
Cruz-Hernandez; Juan Manuel ; et al.	December 17, 2009

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User Interface Impact Actuator

Abstract

A system generates a haptic effect that simulates a mechanical button. The system receives a signal that indicates that a user has contacted a user interface of the system. The system includes an impact actuator. In response to the signal, a moving element of the impact actuator contacts the user interface, which generates the haptic effect.

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Inventors:	Cruz-Hernandez; Juan Manuel; (Montreal, CA) ; Grant; Danny A.; (Laval, CA)
Correspondence Name and Address:	WOMBLE CARLYLE SANDRIDGE & RICE, PLLC ATTN: PATENT DOCKETING, P.O. BOX 7037 ATLANTA GA 30357-0037 US
Assignee Name and Adress:	Immersion Corporation San Jose CA

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United States Patent Application	20090305744
Kind Code	A1
Ullrich; Christopher J.	December 10, 2009

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Developing A Notification Framework For Electronic Device Events

Abstract

Systems and methods are described herein for developing a notification framework for presenting notification information to a user of an electronic device. One embodiment of a method, among others, includes receiving input from physical sensors located in proximity to an electronic device and receiving input from one or more other electronic devices in proximity to the electronic device. The method further comprises assessing a context of the electronic device from the received input. A notification framework is then determined from the assessed context. The method also includes notifying a user of the electronic device of a detected event associated with the electronic device. Notifying the user includes notifying the user within the notification framework.

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Inventors:	Ullrich; Christopher J.; (Ventura, CA)
Correspondence Name and Address:	WOMBLE CARLYLE SANDRIDGE & RICE, PLLC ATTN: PATENT DOCKETING, P.O. BOX 7037 ATLANTA GA 30357-0037 US
Assignee Name and Adress:	Immersion Corporation San Jose CA

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United States Patent Application	20090299711
Kind Code	A1
Rosenberg; Louis B.	December 3, 2009

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Physically Realistic Computer Simulation of Medical Procedures

Abstract

An apparatus for interfacing the movement of a shaft with a computer includes a support, a gimbal mechanism having two degrees of freedom, and three electromechanical transducers. When a shaft is engaged with the gimbal mechanism, it can move with three degrees of freedom in a spherical coordinate space, where each degree of freedom is sensed by one of the three transducers. A fourth transducer can be used to sense rotation of the shaft around an axis.

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Inventors:	Rosenberg; Louis B.; (Mountain View, CA)
Correspondence Name and Address:	PATENT DEPARTMENT (51851);KILPATRICK STOCKTON LLP 1001 WEST FOURTH STREET WINSTON-SALEM NC 27101 US
Assignee Name and Adress:	Immersion Corporation San Jose CA

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United States Patent Application	20090295552
Kind Code	A1
Shahoian; Erik J. ; et al.	December 3, 2009

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Vibrotactile Haptic Feedback Devices

Abstract

Vibrotactile haptic feedback devices are disclosed. For example, in one embodiment, a device includes: a mass, an actuator configured to vibrate the mass, and a coupling disposed between the actuator and the mass or between the mass and a housing, the coupling having a first configuration with a compliance and a second configuration with a compliance, the compliance of the coupling in the first configuration being different from the compliance of the coupling in the second configuration, the actuator being configured to output haptic feedback associated with the first configuration of the coupling and haptic feedback associated with the second configuration of the coupling, the haptic feedback associated with the first configuration of the coupling being different from the haptic feedback associated with the second configuration of the coupling.

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Inventors:	Shahoian; Erik J.; (San Ramon, CA) ; Martin; Kenneth M.; (Palo Alto, CA) ; Schena; Bruce M.; (Menlo Park, CA) ; Moore; David F.; (Redwood City, CA)
Correspondence Name and Address:	PATENT DEPARTMENT (51851);KILPATRICK STOCKTON LLP 1001 WEST FOURTH STREET WINSTON-SALEM NC 27101 US
Assignee Name and Adress:	Immersion Corporation San Jose CA

Apollo Opens New Point of Presence in Equinix London Data Centre

Apollo Supports Customer Demand by Increasing Resilience and Reducing Latency Between London and the USA

LONDON, December 17 /PRNewswire/ -- Apollo, a transatlantic submarine cable system, and Equinix, Inc. ( EQIX), a provider of global data centre services, today announced that Apollo has opened a new Point of Presence (PoP) in Equinix's LD4 London Slough International Business Exchange(TM) (IBX(R)) data centre. This new PoP in LD4 provides Apollo's customers with resilient, intercontinental access between the UK and major cities in the USA. By locating outside central London, Apollo is offering its customers an alternative, low latency route, by-passing major congestion points within central London.

Apollo's submarine cable system connects the world's leading telecommunication and internet companies to the USA, with Apollo North connecting from the UK and Apollo South connecting from France. Apollo chose to extend its cable system into LD4 to meet increasing customer demand for reliable, linear wavelengths between London and the USA. By hosting a PoP in LD4, Apollo will enable its customers to bypass central London, linking directly to its UK landing station in Cornwall. This will improve the resilience and speed of connection, providing an alternative access point between London and the USA in substantially less than 70 milliseconds.

"We are delighted to be associated with Equinix, the world's leading data centre services provider," said Richard Elliott, managing director of Apollo. "Directly connecting to LD4 will offer our customers diversity from other London networks and meet the growing requirements of our customer base. By investing in this new PoP, we have enhanced our network in a way that cuts latency, increases diversity and ensures optimum resilience."

"As one of the main transatlantic cable providers to the USA, we are excited to be working with Apollo to provide its customers with a first class network architecture," added Russell Poole, Equinix's General Manager in the UK. "With a direct access cable into our LD4 data centre, Apollo can offer a reliable alternative to connecting through central London and provide its customers with the consistent low latency that they need."

About Apollo

Apollo-SCS (http://www.apollo-scs.com)Ltd is a UK based company which owns, operates and markets the Apollo Submarine Cable System. The Apollo submarine cable system is the most recently installed, fibre optic network running from UK to US and France to US offering City to City LAN PHY services. The Apollo system is flexible, with high resilience and reliability, the system has an ultimate capacity in excess of 8Tbit/s. Designed and implemented as two diverse transatlantic legs, Apollo provides direct connections between the US and France and the UK and the US.

Morgan Joseph Reiterates a 'Buy' Rating on Equinix (EQIX); Raises PT & Estimates

Morgan Joseph reiterates a 'Buy' rating on Equinix, Inc., raises price target from $105 to $125.

Morgan analyst says, "We are increasing our price target for Equinix shares to $125 from $105 given our anticipation of robust demand for Equinix' data center services throughout 2010 and 2011, and the introduction of what we believe are conservative estimates for 2011. We also continue to expect the company's data center expansion plans to significantly contribute to revenue growth over the same time
period. For 2011, we estimate sales and adjusted EBITDA of $1.25bn and $591mm, respectively. We are maintaining our 2009 sales and adjusted EBITDA estimate of $878mm and $400mm. We are also maintaining our 2010 sales and adjusted EBITDA estimates of $1.07bn and $506mm, respectively."

Synaptics’ Fuse Lets You Squeeze it, Touch its Behind

Synaptics has just announced this really neat concept phone called the Fuse, which has sensors of pretty much every type all over it. First off, it has a touch sensor on the back of the device when combined with haptic feedback, unlocks some great potential for 3D apps and multitouch. The device is also pressure sensitive, so squeezing its sides will let you stop inertial scrolling and open applications.

Read more: http://www.intomobile.com/2009/12/14/synaptics-fuse-lets-you-squeeze-it-touch-its-behind.html#ixzz0ZtIM9FUI

Synaptics Debuts Fuse™ Next-Generation Mobile Phone Concept

Goldman Sachs Fund Rides On Quality

The last time IBD profiled Goldman Sachs Growth Opportunities on June 12, it was way ahead of its peers, thanks to its exposure to high-quality growth stocks. Little has changed.

...

The managers' bread and butter are high-quality stocks selling at attractive prices. What are high-quality companies? They're industry leaders with recurring revenue, high return on invested capital, sustainable free cash flow and pricing power.

Such traits translate into high long-term growth rates, which fuel meaningful price advances.

Getting in at attractive valuations gives the fund room to benefit from a stock's multiple expansion during its run-up, the managers say.

The fund's top holding as of Sept. 30 was Equinix, which provides network services. Q3 earnings rose 213%, which was 57% higher than estimates by analysts, who see a 30% rise in Q4 and 23% growth in 2010.

Fundamental Picture

Fundamental weak spots appear to be a high debt and low return on equity. The company had leveraged up on capital to expand its data centers. A bright spot is that after-tax margin is the highest it's been in four years.

The stock has broken out of several basing and consolidation patterns since mid-June. Its price has risen 47% since then. It sits near a new high, 8% beyond its latest basing area.

Equinix, looking forward...

Equinix (EQIX) recently released a few additional data about the proposed acquisition of Switch and Data (SDXC), which are worth a mention.

Stephen Smith, CEO, and Keith Taylor, CFO, participated at the NASDAQ OMX Investor Conference, where they covered a few issues related to the acquisition rationale.

Portions of the transcript of the presentation, held on December 2, 2009, have been filed with the SEC. Slides presented on that occasion are also available on the Equinix I/R section.

Additionally, Equinix filed an S-4 form which gives a great insight into the combination of the two Companies, including some background to it.

We'll start from the NASDAQ OMX Conference, where management summarized several key reasons why Equinix went for this move (web cast available at this link):

• Stephen Smith—Equinix Inc.—President and CEO
• So we announced on October 21 the acquisition of Switch & Data for $689 million of equity value at the time of signing on October 20. It is an 80/20 split. 80% stock, 20% cash. We expect to close this sometime mid to late first quarter.
• The rationale for the deal was pretty straightforward. This is a US-based decision. It is driven by scale, access to capital, cost of capital, all the things that are driven underneath a capital-intensive business that are going to bring us into new markets. We were in six markets in the US. We will pick up an additional 16 markets.
• They will bring us capacity in the current six markets that we are in today. The interconnection, they’re are very focused. It is a very similar business model to the Equinix business model. They are very network dense. They are very network focused. So from an integration standpoint this will be fairly straightforward and there are synergies here.
• And then financially, we will pick up some NOLs here so there will be a financial benefit.
• It will now put us in nine of the top 10 markets in the US. And again, that is very important to us as we study the future trends of the business more and more of this infrastructure, servers, storage equipment and networking gear is getting deployed closer to the edge of the network. The edge of the network is extending. Latency matters for the applications are running on this infrastructure.
• So having a broader footprint in the US has been very, very critical for this decision.
• So we are pretty excited about this. This really gives us a chance in the US market to really be able to satisfy almost any requirement that we would see anywhere in the US from a city standpoint.

(you may click on the chart to enlarge)

Two key points from the presentation:

• Stephen Smith—Equinix Inc.—President and CEO
• It is going through the regulatory and Department of Justice review as we speak.
• On the cost side, we’ve estimated $20 million of synergies who keep an eye on the rest of the leadership team, believe that there will also be revenue synergies.

It is pretty standard for acquisitions of this size to go under Department of Justice investigation, as Tier 1 Research summarizes:

• T1R Insight: Equinix acquisition of Switch and Data under DoJ scrutiny
• The US Department of Justice is scrutinizing the proposed acquisition of Switch and Data by Equinix. Many who have seen similarly sized M&A deals are not surprised – this type of examination is fairly standard. T1R has spoken with several Equinix customers that have discussed the connotations of the deal.

Equinix has also recently re-filed a Notification and Report Forms with the Antitrust Division of the Department of Justice:

• Equinix FORM 8-K
• Equinix’s re-filing will give the Antitrust Division staff more time to review the information submitted by the parties and to complete its initial investigation before the staff must determine whether to issue a formal request for additional information. The effect of this re-filing will be to extend the waiting period under the HSR Act an additional 30 days to January 6, 2010.

As to the savings/synergies announced at the conference, the $20 million forecasted do represent a relevant number, if we take into consideration that Switch and Data's revenues are, right now, about $ 215 million per year (3Q 2009 revenues of $53,5 million annualized). There's certainly room to improve leverage in the business, through this acquisition.

The S-4 Form gives a great insight into the acquisition, its background, and some of the future targets for the combined Company (and the sector).

First, a look at the history of the deal:

• Background of the Merger
• Over the years, including prior to Switch and Data’s initial public offering in 2007, its board of directors and management have regularly evaluated its business and operations, as well as its long-term strategic goals and alternatives to maximize stockholder value in light of changing business and market conditions. Switch and Data’s board of directors has regularly examined potential strategic acquisitions or combinations, including a potential business combination with Equinix in 2006. These discussions, however, were terminated prior to Switch and Data’s initial public offering in early 2007, because the expected value of Switch and Data following the initial public offering significantly exceeded the value that Equinix had indicated it would be willing to offer.
• In January 2009, a representative of Switch and Data was approached by a privately-held firm in its industry based outside of the United States (the “International Party”) to explore whether a business combination might be feasible. A non-disclosure agreement was executed on March 17, 2009.
• In late April 2009, prior to Piper Jaffray being engaged as Switch and Data’s financial advisor, an Equinix representative indicated an interest in meeting with Switch and Data during a discussion with a representative of Piper Jaffray. The representative of Piper Jaffray delivered this request to William K. Luby, the chairman of Switch and Data’s board of directors.
• On September 9, 2009, Switch and Data’s board of directors had a telephonic meeting with representatives of Piper Jaffray to discuss the August 28, 2009 letter of intent, the current proposed transaction terms with Equinix and the International Party, the current state of negotiations with Equinix and the International Party and the alternatives available to Switch and Data (which consisted of remaining independent, completing a transaction with Equinix and combining with the International Party). The board of directors asked representatives of Piper Jaffray several questions regarding the valuation range that might be achieved in further negotiations with Equinix and a discussion ensued.
• … on September 25, 2009... the Switch and Data board of directors also determined, based upon the analysis of its financial advisors and after comparing the value to Switch and Data’s stockholders of a transaction with the International Party in which Switch and Data would be the surviving company with the proposed transaction with Equinix, that a transaction with the International Party was unlikely to result in value to Switch and Data’s stockholders equal to or greater than the proposed transaction with Equinix. Also, based upon the Switch and Data board of directors’ knowledge of the industry and the analysis of Switch and Data’s financial advisors, the board determined not to approach the other participants in the industry. This was due to the significant premium offered by Equinix, the knowledge of the strategies and the financial conditions of the participants in the industry and the risk of delay imperiling the proposed Equinix transaction.

The guessing game about the name of the International Party interested in a merger with Switch and Data may begin (as a reminder SDXC had an agreement to jointly market services with Interxion in Europe) - it is obvious that Equinix's move, as we wrote previously, also obtained the result to avoid the creation of a global competitor in the sector, and stopped a foreign entity from achieving a US listing, without going through an IPO, and a strategic footprint in the most important market for the colocation sector.

The most interesting piece of information, however, is hidden among the considerations made by the two Companies through the negotiations that led to the combination of Equinix and Switch and Data.

• Equinix Projected Financial Information
• Equinix does not as a matter of course make public projections as to future performance, earnings or other results beyond the current fiscal quarter due to the unpredictability of the underlying assumptions and estimates. However, in connection with the merger, Equinix provided Switch and Data with non-public projections of Equinix’s standalone financial performance for its fiscal years 2009 through 2014 as set forth below.

Switch and Data also provided similar projections to Equinix for the same time frame (5 years). Here are the two data sheets (click to enlarge):

While these projections are based on several variables (you may read the full disclaimer at page 48 of the filing), they do represent an interesting analysis of how management is forecasting the future of the sector and their performance. For example, both Equinix and Switch and Data predict growth above 20% for the next 4 years, with a drop below this level just in the 5^th year:

Another similarity we may find in both predictions is related to the EBITDA growth, which is seen improving both as an absolute number and as a percentage of revenues (from 44,4% in 2009 to 53,5% in 2014 for Equinix, and from 36% to 47,7% in the same time frame for Switch and Data).

Both Companies also expect EBITDA to exceed CAPEX in 2012 (EBITDA is a very close proxy for cash flow).

While the scope of this article is an update of the news related to the SDXC acquisition, we can't keep ourselves from analyzing some of these Equinix numbers on a (still) stand alone Company basis (an exercise mainly made to focus our readers' attention on the EBITDA and cash flow dynamics of this business model, the two metrics we favor to analyze this Company).

Assuming Equinix can achieve the growth predicted, the Company is expected to reach an EBITDA of about $1.4 billion in 2014, a number which we translate into roughly $ 1.25 billion of cash flow. With less than 40 million shares outstanding (excluding converts and options, plus obviously new shares issued for the SDXC acquisition, as here we are using EQIX numbers only), we would get over $ 30 per share of EBITDA/cash flow – whatever multiple you may decide to use for a correct valuation, in this scenario the current market price of about $ 100 per share doesn't really sound over valued.

The acquisition of Switch and Data won't change dramatically the picture, and we await more data at the next conference call to do additional financial modelings for the combined Company.

Disclosure: Long EQIX

SEC to Regulate Nasdaq's Co-Location

from tradersmagazine.com:

Co-location is a service offered by market centers and third parties, such as Equinix, that involves making rack space available to firms for their trading servers in facilities near market centers' matching engines.

Nasdaq works in partnership with Verizon, but largely controls the marketing and management of its co-location efforts. NYSE Euronext does everything on its own. (The exchange operator would not comment on whether or not the SEC intends to oversee its services.)

The other two major market operators--BATS Exchange and Direct Edge, an ECN--have chosen not to get into the business of selling rack space. They have entered into agreements with Savvis, BT Radianz and Equinix to market and manage their co-location efforts. Placing one's trading server nearer to an exchange matching engine reduces communication times, increasing the chances of beating competitors to profitable trading opportunities.

Fierce Telecom Leaders - Jarrett Appleby, CMO, Equinix

an interview with Jarrett Appleby at Fierce Telecom:

>>Data networking is old hat to Equinix's Chief Marketing Officer Jarrett Appleby. In fact, the former CMO of Reliance Globalcom came to Equinix in December 2008 with over 25 years of telecom and datacom experience under his belt. Fierce Telecom Senior Editor Sean Buckley recently caught up with Appleby to talk about the evolution of the data center market.

Read more: http://www.fiercetelecom.com/story/fierce-telecom-leaders-jarrett-appleby-cmo-equinix/2009-12-15#ixzz0ZmjoCkPZ

Lexus Remote Touch System Wins Technical Innovation Award

Published in the December 2009 issue of popular mechanics:

TECHNICAL INNOVATION

Lexus Remote Touch

Available on Lexus HS250h and RX 350

As automobiles accumulate more and more advanced electronic functions, how do you control them? Newer systems attempt to access nearly every automotive function with a single-point controller. And every strategy has had drawbacks—except for Lexus’s new Remote Touch.

This haptic system works just like a computer mouse: You guide an arrow on the car’s main screen and click a button at the controller’s base with your thumb to make a selection. It offers subtle but effective force feedback to let the operator know when the cursor has crossed to a different function or onto a virtual button. And you can dial in exactly the amount of feedback you want.

This brilliant system is the solution we’ve been waiting for. Remote Touch is only available on the Lexus HS250h and RX 350.