Sunday, May 3, 2009

Immersion 1Q 2009 forecast

Immersion (IMMR) will be reporting 1Q 2009 results on Monday, May 4.

As this is our first article about the Company, a few words about it and its business model.

Immersion is all about haptics, a word from old Greek that refers to the sense of touch. You can have a look at Wikipedia for more information about Haptic technology or refer to the White Papers (like Improving the Mobile User Experience through Touch) published by the Company – as to the subject of our article, we’ll just underline that Immersion is the world’s leading supplier of complete, programmable haptic systems, that may be used in medical applications, mobile phones, screen based interfaces, gaming, etc.

The Company’s IP is quite impressive, with over 700 issued and pending patents, ranging from simple to very sophisticated force/touch feedback effects.

(all images from Immersion’s latest Investor Presentation, click on the pictures to enlarge)

The Company has recently reorganized its business units around the following two segments:

Medical

Medical simulators for training physicians on the look, sound, and feel of minimally invasive surgical and medical procedures (approximately 45% of revenue).

Touch

Systems and technology for integrating touch feedback into licensees’ products. [Immersion’s] touch technology is being rapidly adopted throughout the automotive, consumer electronics, gaming, industrial, commercial, and mobile phone markets (approximately 55% of revenue).

Medical has recently seen the introduction of new product lines:

Notably, 2008 Medical revenues were executed without the benefit of new product introductions. This changes significantly in 2009, with the recent launch of three new products and more in the pipeline. This includes a new EBUS-TBNA bronchoscopy module, the first-ever haptic medical simulation for a new lung cancer diagnostic procedure (see press release); new Carotid modules for our endovascular platform that provide multimodal virtual reality training for carotid angioplasty and stenting stroke prevention measures (see press release); and a new Lap Chole 2.0 module for our LaparoscopyVR system targeted for training of gallbladder removal (see website).

Touch includes several areas that are at different development stages – among them mobile phones (the most important category for number of potential users, with about 1.2 billion units sold per year), console gaming, touch screens for consumers (GPS systems, MP3 players, etc.), portable games, screen controlled devices, casino gaming, and rotary controls and touch screens in the automotive vertical (as a side note, royalties may vary quite a lot depending on the sector and the effect required):

This very quick summary underlines some of the strengths of the Company: several areas of application, an impressive Intellectual Property, a great potential, if only the technology becomes widely accepted and implemented.

Unfortunately for Immersion, things aren’t so easy, as it is often the case with new products that need an “evangelistic approach” to be brought to the market, and so far the company has struggled converting all this potential into actual revenues. While recently there have been several proofs that haptic is slowly becoming more popular, especially in mobile phones, revenues haven’t really started increasing, and management is still working to find a business model that can help promoting the technology, establishing the Company as THE supplier for it, while growing revenues as well.

A typical example is the mobile phone industry: Immersion has a great customer base (Nokia, LG and Samsung, that represent the three largest unit producers), growth in touch screen smart phones, lead by Apple’s iPhone success, has been impressive, but actual revenues haven’t really impressed – probably a combination of low per unit royalties or flat fees given as an incentive to its major customers for the acceptance and introduction of the technology:

Haptic has been mentioned as gaining momentum in this vertical for quite a while:

“Haptics will show up with shocking frequency this year in cell phones and other mobile devices. In some cases, haptics will help compensate for the disappearance of buttons in cell phones. . . haptics will also return to its roots by improving game play on cell phones. One way or the other, haptics will shake up the gadget industry in 2008.” (Eagan, Mike. 2007. Top 10 Trends: No. 9, The year of haptic feedback. Computerworld).

Independent researchers have underlined the advantages of using haptic in smartphone-type devises:

Samsung and LG have been the first large volume producers to embrace the technology and use it as a selling point in their advertisement:

Samsung SCH-W420 Haptic phone commercial (video)
LG "Touch the Wonder" Cyon phone commercial (video)
Korea’s SBS news on Samsung's Haptic phone (video)

Although Immersion does not reveal details of its contracts with the major phone suppliers, we can speculate that royalties range around 10 cents per phone including haptics for LG and Samsung, while Nokia has been paying a fixed royalty of about $ 500,000 per quarter, before the release of its first haptic phone, Nokia 5800 XpressMusic, which has been a big success so far (and there’s no indication if there may also be a small per unit royalty or an increase in the fee going forward):

Technical Specifications

Touch user interface optimized for one-hand use with tactile feedback

This is taken from Nokia’s recent conference call (transcripts available on seeking Alpha, emphasis added):

Olli-Pekka Kallasvuo - President and CEO of Nokia

Along these lines, in Q1, the Nokia 5800 XpressMusic, our first mass market touch screen product, combined with our Comes With Music service was a big success story. The Nokia 5800 has seen very strong demand in every country, where it has been launched. Already in Q1, the 5800 was Nokia’s number one revenue and gross margin generating product and was the number one volume and value product in the UK.

Despite some capacity constraints, we received approximately 2.6 million units in Q1, as the product ramped up globally. Today, all sales channels are open. We have increased our capacity and we are shipping the Nokia 5800 at the rate of more than 1 million units per month.

Some of the contracts signed in the mobile phone sector will come for renewal soon, and the Company might be able to re-negotiate the royalties, especially if more complex applications will be applied in the future. Immersion might also be able to benefit from games or other applications related to haptic-enabled mobile phone: some clarity or guidance from Immersion about these aspects of the business would certainly help investors understand better which direction the Company is following in this vertical.

Having recently settled all its legal disputes from the past, with Microsoft and Sony, the Company should now be able to concentrate all its effort to execute its business plan, as explained by the new CEO, Clent Richardson, during the 3Q 2008 conference call (transcripts from seeking Alpha):

Clent Richardson – CEO

Put quite simply our technology is applicable everywhere. Everywhere there is a touch user interface. The user experience in products that don’t use Immersion’s technology fall far short of what it could be and ought to be. During Q3 we executed against these objectives while posting record revenue. We concluded two important legal disputes that cleared the decks and freed up management’s time and energy to focus on execution. We are now able to move beyond these matters enabling us to return our focus on ramping the business. We made meaningful progress in building the executive team and adding key hires who share my passion and vision to implement Immersion’s technology globally and pervasively.

Immersion has already an impressive customer list:

While we’ve already talked about the three major mobile phone producers, a couple of partnerships, in different verticals, may be worth a closer look:

Haptics At Large: The Visteon and 3M Joint Venture Project Car

At the Consumer Electronics Show this past January, not only did haptics feature largely in phones, but Visteon and 3M showcased a BMW SUV cockpit with a very cool haptic interface. In the center stack, a large capacitive panel reacted to a finger press, or even the approach of a hand. When you pressed down, the panel provided haptic feedback, such as a click and a rebound, indicating you had pressed a dashboard button even though the panel was flat. The center control knob also used force feedback and adapted its range of motion and tactile profile to the appropriate function.

The haptic feedback solution enabled the panel to be a single smooth surface rather than a large array of individual switches. It also allowed only currently available functions to be displayed and activated.

Immersion will also be supplying the next 2012 Tesla Model S and is already supplying an innovative Driver Control for Lexus (Toyota):

Fueling Haptics Innovation in the Automotive Sector

Immersion has signed a license agreement with tier-one systems integrator Visteon that will lead to future innovations for haptic-enabled controls in the automotive sector (see press release). Visteon’s booth at CES featured a car control console of the near-future with our technology embedded and brought to life. (See CNET video). Road & Track just reviewed the new 2012 Tesla Model S and highlighted its use of haptics. According to Road & Track “The icing on the cake is inside the Model S, where a huge 17-in. touch-screen infotainment system acts as the center console. It's got a haptic interface (meaning you can feel it click when you press it), with 3G wireless connectivity and is fully configurable like a mobile desktop computer.” (See Road & Track article). Immersion also announced the first-ever automotive-grade actuator to enable fast integration of advanced touch feedback into touchscreens and touch surfaces for the global automotive industry. (See press release).

TouchSense Technology Powering New Driver Control in 2010 Lexus RX

A 2D haptic device with Immersion technology developed by Alps Electric was integrated by Denso Corporation into the 2010 Toyota Lexus RX. Toyota, the world’s largest auto manufacturer, is using the device to elevate the automotive user experience, especially safety. The Remote Touch haptic control tips and tilts in all directions, moving a cursor on a screen above. When the cursor moves over different icons, like buttons, the driver feels haptic feedback. The system gives Lexus designers more flexibility in positioning the navigation/audio display, such as very near to the driver’s peripheral view of the road – a clear safety advantage. Watch CNET video.

3M and Immersion have been working together for quite a while to introduce haptics in the gaming industry:

The 3M MicroTouch Capacitive TouchSense System, 3M's tactile-feedback touch system, officially debuted at the Global Gaming Expo 2008 in Las Vegas, NV in the exhibits of seven leading gaming display providers: Ceronix, Inc., Effinet Systems, Kortek Corporation, Kristel Displays, Tatung Co., Tovis Co. Ltd, and Wells Gardner Electronics Corp. In displays ranging from 7-inch mechanical button replacement screens to oversized 32-inch slot screens, these display integrators featured tactile-feedback touch solutions as an upgrade option for existing casino games, as well as an enhanced touch displays for next-generation games.

The 3M MicroTouch Capacitive TouchSense System (MCT System) is the recipient of the Casino Journal platinum award for the “most innovative gaming technology product of 2007” and the Casino Enterprise Management “Slot Floor Technology 2008” award.

About the 3M MicroTouch Capacitive TouchSense System (3M MCT System)

The 3M MCT System combines a 3M MicroTouch ClearTek II capacitive touch sensor and an enhanced 3M MicroTouch EX II controller with tactile-feedback technology licensed from Immersion Corporation.

Let’s have a look at some financials, finally.

Revenues in 2008 were about $ 36.5 million, including the discontinued 3D line of business. The Company enjoys a very good cash position, with $ 85.7 million available, mostly the heritage of the Sony settlement, a few years ago.

In its own forecast, Immersion was approaching 2009 as an opportunity to accelerate the growth rate, increase market opportunities by signing new licenses and/or entering new markets, and expanding the geographic reach. For this reason, the Company had also taken measures to make additional investments in the business, including strengthening its management team, and was prepared to go through a few quarters at a loss, to return to break even in the last part of 2009 and hopefully to profitability in 2010.

In the last part of 2008, due to the negative economic climate, Immersion has also implemented some cost cutting measures, including relocating the Medical line of business in California.

This is taken from Immersion 4Q 2008 conference call (transcripts available from seeking Alpha):

Stephen Ambler – CFO

As we've already mentioned, we are relocating our Medical line of business to San Jose. This move stems from the expiration of our lease in Gaithersburg, Maryland and the opportunity to realize significant synergies and cost savings leveraging the space and infrastructure that we have available at our corporate headquarters. This move will also save significant sums on travel, ongoing expenses related to having additional offices, and other operational efficiencies.

Several key managers will be relocating during this process and we expect to supplement them with new hires as needed in San Jose, which we are presently finding to be a quality hiring market and should remain so for the foreseeable future.

While we're not providing specific guidance at this time, we expect to begin realizing cost savings from this move starting in mid-2009. We estimate that savings will exceed $1 million per year in subsequent years.

Clent Richardson – CEO

Being mindful of the economy and our business plans, we have implemented salary freezes across the company and curtailed all non-essential travel. We intend to exit 2009 with a very strong cash position and I want to be quite clear – our goal is to attain a breakeven position, then turn the corner by delivering profit as quickly as possible and drive to sustained profitability moving forward.

2009 is a year of execution, where we will begin to deliver on the promise of Immersion, and I look forward to updating you on our progress regularly.

In its recent Annual Meeting of Stockholders filing, Immersion gave more details about this:

As the macro-economic climate declined and began to affect our financial results, the Board, at the recommendation of the committee, took action in early 2009, freezing executive salaries at 2008 rates and instead chose to incentivize the executive team with long-term incentives, which is discussed further below. Further, in March 2009, Mr. Richardson, recognizing the need to reduce costs in the extraordinarily tough business environment, voluntarily reduced his base salary by 12% and reduced all other executive’s base salary by 5%

A couple of one-time events will probably impact 1Q 2009 revenues:

Stephen Ambler

Fourth quarter mobility revenues of $1 million represented 11% of total revenues. I'll note that due to revenue recognition rules related to payment terms from one of our licensees, approximately $700,000 of repeating license revenues that we would normally have recognized in Q4 of 2008 will now be recognized in Q1 2009.

Also I alluded to in my part of the discussion that we had to defer about $700,000 of revenue out of Q4 into Q1. We weren't actually expecting at the beginning of the quarter; it came up during the quarter. And so it makes the quarter look worse and the next quarter will look a little bit better.

I will also note that we expect to generate some remaining revenue from our 3D line of business in the first quarter of 2009 or until the disposition of this group is finalized.

As I noted previously, Immersion is not issuing guidance:

Mark McMahon - Raymond James & Associates

Is that something you guys are thinking about changing going forward from this straight, absolutely no guidance rule towards helping analysts out there or potential analysts get better a better handle on what your businesses look like currently?

Stephen Ambler

So some extent our business is seasonal as well. We have different parts of the business seasonal at different times. Q4 is normally good for the gaming side of the business. Q3 is normally very good for some of the Medical side of the business. So those come into play, and we're still an early stage company. Some of our revenues are effectively lumpy. That's just one of the things you suffer with.

Clent Richardson

And I think, to your question, Mark, this will be an unsatisfactory answer to your question - we're just not going to be giving guidance for the foreseeable future, and I think if you're someone that tracks our business, if you look at 2006, 2007, 2008 results you can see quarter by quarter, and our goal is to grow year-on-year quarter by quarter. And I think that's probably as much as we're going to say on this at this point.

For this reason, too, not many analysts are following the Company and Yahoo shows coverage by just two firms, with a 1Q 2009 estimate of revenues in the $ 7.54 million range, and a $ 0.23 loss foreseen for the quarter.

Internap patent application

follow up to a previous application...

United States Patent Application	20090040938
Kind Code	A1
Klinker; James Eric	February 12, 2009

SYSTEM AND METHOD FOR END TO END ROUTE CONTROL

Abstract

Session independent end to end route control is provided by coordination between a pair of route control devices. Each device determines whether received traffic qualifies for end to end route control and whether the device at the other end supports end to end route control. If so, then the route control devices determine a routing mode, such as tunneling or address translation, and routing parameters. The performance of the selected path is monitored and is changed if the performance becomes unacceptable. Path performance can be measured using one-way measurement techniques that use a common inbound path or a control channel.

Inventors:	Klinker; James Eric; (Oakland, CA)
Correspondence Name and Address:	JOHN S. PRATT, ESQ;KILPATRICK STOCKTON, LLP 1100 PEACHTREE STREET ATLANTA GA 30309 US
Assignee Name and Adress:	*Internap* Network Services Corporation Atlanta GA
Serial No.:	252183
Series Code:	12
Filed:	October 15, 2008

Internap new patents

United States Patent	7,490,144
Carlson , et al.	February 10, 2009

Distributed network management system and method

Abstract

A distributed network management system and method of operation. The system includes at least one hub server and at least one remote server, where the hub server and the remote server communicate with each other. The remote server additionally communicates with and monitors one or more network devices. In the event that the remote server becomes inoperational, the hub server assumes monitoring of the network device. For redundancy, primary and secondary hub servers can be provided, wherein the primary and secondary hub servers communicate with each other and are capable of communicating with the remote server. For further redundancy, primary and secondary remote servers can be provided, wherein the primary and secondary remote servers communicate with each other but independently monitor the network devices. In the peered remote configuration, the hub server is capable of communicating with either of the remote servers. Where both the hub servers and the remote servers are peered, each hub server is capable of communicating with each remote server.

Inventors:	Carlson; John (Seattle, WA), Hinderliter; Tim (Seattle, WA), Metcalf; Leigh (Seattle, WA)
Assignee:	*Internap* Network Services Corporation (Seattle, WA)
Appl. No.:	10/790,156
Filed:	March 1, 2004

---

United States Patent	7,447,798
Klinker	November 4, 2008

Methods and systems for providing dynamic domain name system for inbound route control

Abstract

The present invention relates to methods and systems for providing dynamic domain name system (DNS) for inbound route control. For instance, the present invention provides a method that considers load data for each of the network locations that provide an application, such online content or a web site available at multiple geographically distinct data centers, as well as performance data for paths through the various network service providers that serve the locations where the application is available. The IP address that is delivered by the DNS is dynamically controlled to select which IP address, i.e., provider, provides the best path.

Inventors:	Klinker; Eric (Oakland, CA)
Assignee:	*Internap* Network Services Corporation (Atlanta, GA)
Appl. No.:	10/774,445
Filed:	February 10, 2004

---

United States Patent	7,447,153
Klinker	November 4, 2008

System and method for end to end route control

Abstract

Inventors:	Klinker; James Eric (Oakland, CA)
Assignee:	*Internap* Network Services Corporation (Atlanta, GA)
Appl. No.:	11/063,057
Filed:	February 22, 2005

Friday, May 1, 2009

Immersion Annual Meeting of Stockholders

some highlights from the filing (chapeau on the compensation reduction...):

The Compensation Committee’s recommendations regarding executive compensation in 2008 and 2009 took into account these management changes as well as our performance, the current global economic recession and the widespread concern over executive pay. As further described below, at the beginning of 2008, our executive compensation as a whole ranged from the 25 ^th to 50 ^th percentile relative to a peer group of medical device and technology companies of similar size and revenue. With the significant changeover in management, the Compensation Committee recognized the need to recruit the necessary talent for us to execute on our growth strategy and made decisions to provide competitive packages to achieve this goal, while at the same time focusing a significant part of these packages on long-term incentives to align the management team with the interests of its stockholders. As the macro-economic climate declined and began to affect our financial results, the Board, at the recommendation of the committee, took action in early 2009, freezing executive salaries at 2008 rates and instead chose to incentivize the executive team with long-term incentives, which is discussed further below. Further, in March 2009, Mr. Richardson, recognizing the need to reduce costs in the extraordinarily tough business environment, voluntarily reduced his base salary by 12% and reduced all other executive’s base salary by 5%.

PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP BY MANAGEMENT

The following table sets forth as of April 15, 2009, certain information with respect to the beneficial ownership of our common stock by (1) each stockholder who is known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, (2) each of our directors, (3) the Named Executive Officers, and (4) all directors and executive officers as a group. Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided; in computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.


				Shares
				Subject to
	Amount and			Options
	Nature of			Included in
	Beneficial			Beneficial		Percent of
Beneficial Owner	Ownership(1)			Ownership(2)		Class(3) (%)

Mazama Capital Management(4)		3,097,090			—		11.1
H Partners Management, LLC(5)		1,500,000			—		5.4
ValueAct SmallCap Master Fund, L.P.(6)		1,413,503			—		5.1
Executive Officers and Directors
Clent Richardson		190,372			182,812		*
Victor Viegas		1,161,209	(8)		1,151,625		4.0
Stephen Ambler		158,127			158,127		*
Richard Vogel		—			—		—
Anne DeGheest		57,000	(8)		32,500		*
John Hodgman		68,250	(8)		63,750		*
Emily Liggett		39,626	(8)		33,126		*
Jack Saltich		78,250	(8)		73,750		*
Robert Van Naarden		68,250	(8)		63,750		*
All named executive officers and directors as a group (9 persons)(7)		1,821,084			1,759,440		6.1

T1R Insight: Equinix and interconnection revenue

from Tier 1 Research daily newsletter:

>>T1R has recently been hearing some criticism of Equinix in regard to its interconnection situation – although its number of ports and cross-connects continue to grow, the revenue it is getting from those interconnection services looks less impressive than it did in the past. T1R thinks that this is much .....

Google container data center tour

from Youtube:

Internap - NOTICE OF 2009 ANNUAL MEETING OF STOCKHOLDERS

Internap has come out with its notice of 2009 annual meeting of stockholders and 2008 annual report.

Giannio, on the IV MB, has already selected the most valuable infos out of them:

bye bye poison pill

from the proxy statement filed today:

In April, 2007, the Board of Directors instituted a Preferred Stock Rights Agreement. Because Shareholder Rights Plans (typically known as poison pills) dramatically alter the balance of power between shareholders and the Board of Directors, it is important to put safeguards in place to protect against the Board supplanting the rights of the shareholders.

The current poison pill has several provisions that are not in-line with current best practices. First, it has never been subject to a vote of the shareholders. Second, the flip-in percentage of 15% is too low, effectively preventing shareholder’s from gaining enough shares to influence the governance of the Company, and therefore adversely shifting the balance of power between the Board of Directors and shareholders. Third, the 10 year sunset provision is too long. The provisions in this proposal would bring any future Shareholder Rights offerings into compliance with current governance best practices, such as those recommended by the RiskMetrics Group (formerly known as Institutional Shareholder Services, Inc. or ISS).

To correct these deficiencies, we propose the Board of Directors terminate the current Agreement and put provisions in place to make sure that any future rights plans are in-line with current best practices. If the TIDE Committee of the Board of Directors feels that it is still in the best interest of the shareholders, and other relevant parties, to have a rights agreement in place, it should place a proposal for a new rights agreement that meets all of the criteria of this proposal on the proxy for this year’s (or a future) Shareholder meeting. This would bring the rights agreement into compliance with current best practices and concurrently allow shareholders to vote on the matter.

cooney letter from 2008 annual report

Since joining the Internap team several weeks ago, one of the most frequent questions

I have been asked is, “What attracted you to join Internap?” My answer is simple: Internap

competes in compelling markets, serves a broad and diverse customer base and has a

unique set of assets to underpin a long-term profitable growth strategy.

Throughout our history, Internap has developed a reputation for delivering best-in-class technologies

and services. Building on our patented Internet route optimization technology, our customers have

access to IP services that are among the best-performing and most reliable in the industry. The

combination of our technology leadership and a world-class 24/7 customer support organization

enables us to deliver industry-leading, 100 percent service level commitments. We are successfully

leveraging these strengths across all of our business units: Data Center Services, IP Services and

Content Delivery Networks.

Of particular value in these challenging economic times is the Company’s strong financial position.

We ended the year with $54 million in cash and marketable securities, more than two times the balance

of our interest-bearing debt and capital leases. Internap has also proven its ability to generate consistent

cash to run the Company’s operations; 2008 cash from operations was $38 million, up 38 percent over

the prior year. These characteristics are important because they give us the flexibility to focus on the

operational and strategic drivers of sustained profitability.

Even in my short time with Internap, it is clear to me that the staff brings an extraordinary level of

dedication, commitment and professionalism to their roles. With this motivated team, uniquely

differentiated assets and growing markets, we are committed to deliver long-term profitable growth

for our stockholders.

Sincerely,

J. Eric Cooney

President and Chief Executive Officer

April 30, 2009

Thursday, April 30, 2009

Switch & Data

a few highlights from Switch and Data conference call (from Seeking Alpha):

IMPROVING DEMAND

Over the past three quarters, George and I have shared with you the impacts we have experienced from the prevailing economic conditions. We have communicated that some customers have been delaying decisions. We also have had customers request ramps or stage implementations for their deployments. On these calls, we also spoke about the small and medium-sized customers who are more affected by the broad economic conditions. We saw this impacting increased churn and slower growth rates from this customer segment. More recently we have been seeing some change in growth dynamics. We saw improving demand and new orders improving from small and midsized customers.

Keith Olson

And Jonathan, on the aspect of our expected growth, we continue to see very strong demand in all of the regions, all of our geographic and in our vertical market segments pipelines and frontals.

Keith Olson

Sure. We don’t see it in the large deals category. We don’t any further degradation in the sales cycle, but we are not seeing any rapid change to what was a lengthening type of decision process. The improvement I was speaking to was in the small and midsize customer that seems to be more impacted in the middle part and later stages of 2008. At the end of 2008, of course we saw a significant new logo or new customer quarter for us. We also saw in the first quarter more demand from our existing customers that seem to have compress some of their growth through the latter stages of 2008. That’s the operating environment we saw the improvements on seeing the mid to small size customer. A couple of month's worth of data doesn’t necessarily provide a lot of data points. But I thought it was worth referencing because the three quarters we spoke about that group or that customer segment being the most affected and now we are starting to see not only net new customers in two good quarters or two healthy quarters of new logos but also demand from our existing small and midsize customers starting to uptick.

Keith Olson

Okay? Let me answer your first part of the question. We saw improving new sales February over January and March over February. So it’s a trend that was kind of a stepping stone of new sales and that’s where we saw some of the uptick from the small and mid size customers as well as the characteristics that we’ve been seeing with our builds being able to attract and address larger scale opportunities, both from our existing customers as well as net new logos a number of those over the period we have communicated about their wins.

Mobile phone shipments fell 13% in first quarter

LONDON (MarketWatch) -- Global mobile-phone shipments fell 13% to 245 million in the first quarter, telecoms consultancy Strategy Analytics said on Thursday. It was the fastest rate of decline in shipments since records began in 1983. All top five vendors sold fewer phones but among them Samsung performed best, with shipments down just 1%. Nokia's shipments fell by 19% from the year-earlier period.

TinBu Partners With NaviSite (NASDAQ: NAVI) For 5-Year Internet Hosting Agreement

The rapid growth of TinBu's interactive online content will now be managed utilizing NaviSite's world-class 16 enterprise class data centers around the world.

Pensacola, Florida 4/30/2009 12.00 GMT (TransWorldNews)

(Pensacola, FL) TinBu, a leading provider of interactive content channels to online publishers around the world, is pleased to announce they have entered into a 5-year contract with NaviSite (Nasdaq: NAVI ) to serve as the delivery pipeline for their patent-pending interactive content.

"We have seen substantial growth among web publishers who have choose to integrate our patent-pending interactive content channels into their web sites," said Bin Tu, TinBu's CTO. "As a result the demands on the technical backbone needed to deliver our content channels to our publishing partners around the globe has increased considerably. We plan on transferring our entire global content and ad distribution platform to NaviSite by May 12, 2009," added Tu.

NaviSite leverages a global delivery model with a presence across three continents. NaviSite has major data center facilities in Atlanta, GA; New York, NY; Syracuse, NY; San Jose, CA; Houston, TX; Vienna, VA; London, UK; and Delhi, India. Their 16 enterprise class data centers are spread across the US and the UK. NaviSite also has a Network Operating Center (NOC) in India. The NOC offers round-the-clock customer support for all core infrastructure management . The center supports all five managed services data centers in the U.S. and the UK.

Stephen Susnar, Senior Integration Director for TinBu, was responsible for negotiating the 5-year contract with NaviSite. "TinBu's content platforms is now live on several thousand Web-sites around the world, with a substantial amount of continued growth anticipated in the U.S., Latin America, Canada, and the EU throughout 2009 and 2010," said Susnar. "As our technology and content platform has been adopted by additional publishers month over month, we have seen the need to upgrade the delivery speed, performance, and global scalability of our technical delivery infrastructure. Moreover, as TinBu adds more demanding content channels to our platform, including live and archived video, audio files, and rich-media advertising options, NaviSite gives us exactly what we need to ensure flawless delivery. Most importantly our partnership with NaviSite ensures that TinBu's current and future publishing partners will see increased performance and the security of unparalleled reliability in terms of how our content platform and integrated advertising options perform 24/7 around the globe," added Susnar.

TinBu plans on transitioning to the NaviSite platform during the first two weeks of May, 2009. The changeover will be seamless to TinBu's current publishing partners, although they may notice even faster load times and interactivity with any of the TinBu content channels they are currently utilizing on their Web-sites.

About TinBu:

TinBu uses patent-pending technology to provide interactive data products to leading online and wireless companies worldwide. TinBu`s clients include AOL, AOL Latino, AOL Canada, AOL Mexico, Telemundo, MSN, MSN Español, MSNBC, USA TODAY, BellSouth, ATT, Media General, Inergize Digital Media, CBS Television, ABC Television, Fox Television, CBS Radio, Boston Herald, Boston Globe, Tribune, Toronto Star, CBC New Media, My Red Fish, Local Solutions Networks, Motricity, uClick, St. Louis Post Dispatch, Hello Metro, New York Daily News, DirecTV, Univision, Terra Networks, Yahoo!, People PC, New York Post, and many others. For more information visit them online at http://www.tinbu.com/.

FREEWHEEL= INTERNAP CUSTOMER

from the Yahoo MB, post by crvcybr (S. Jose is the Equinix data center):

>>“DoubleClick for Web Video” Start-up FreeWheel Raises $12 Million
by Peter Kafka

FreeWheel is essentially an online ad video network operating behind the scenes and connecting Web video advertisers and publishers. If that sounds a bit like DoubleClick, the display ad infrastructure company that Google (GOOG) acquired last year, that’s not a coincidence. Co-founders Doug Knopper and Jon Heller are both DoubleClick vets.

Freewheel Media Inc. (AS26558) FREEWHEEL 26558
Freewheel Media Inc. (AS26558) FREEWHEEL 26558
FreeWheel Media Inc. INAP-NYM-FREEWHEEL-17497 (NET-63-251-28-0-1) 63.251.28.0 - 63.251.28.255
FreeWheel Media Inc. INAP-SJE-FREEWHEEL-21133 (NET-74-217-66-0-1) 74.217.66.0 - 74.217.66.255

Equinix Opens New Global IT Development Center in Singapore

P/R Asia related:

>>Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, announced the opening of a new global IT development center in Singapore on 29 April 2009. To support Equinix’s growing global business, which now spans 18 markets in North America, Europe and Asia-Pacific, the center will provide dedicated global application development support, database management and technical support services to all Equinix business units globally.

“As an industry leader dedicated to ensuring the vitality of the information-driven world, Equinix’s investment in this center represents our commitment to further strengthening our global IT capabilities that support the mission-critical data center and interconnection infrastructure Equinix provides for the world’s leading businesses,” said Brian Lillie, Chief Information Officer of Equinix.

Rear-Admiral (NS) Ronnie Tay, Chief Executive of the Infocomm Development Authority of Singapore welcomed Equinix's new expansion in Singapore. "Today, Singapore is recognized world-wide as a trusted hub for businesses looking to offshore their operations. The set up of Equinix's global development center will add to the vibrancy of our infocomm eco-system, increasing business opportunities and knowledge exchange between global and local enterprises. Local infocomm enterprises will now have the opportunity to partner and support Equinix’s global operations via the center."

Manohar Khiatani, Deputy Managing Director, Singapore Economic Development Board, congratulated Equinix for the new center’s establishment. “We are delighted that Equinix has set up its global development center in Singapore. With this, Equinix joins the growing number of companies managing their global functions here. Equinix’s investment also underlines Singapore’s position as a global IT hub, and is strong testimony to the quality of our IT talent and infrastructure.” said Khiatani.

“We selected Singapore for the location of this center based on its multi-lingual talent pool, its commitment to developing human capital and its leadership as an information technology hub,” said Lillie. “Singapore also has the largest customer base for Equinix in the Asia-Pacific region. We look forward to continued investment and growth in this important market.”

Equinix is hiring staff for the global IT development center locally, doubling the company’s IT headcount in Asia-Pacific. This investment will be in addition to the new US$45M SG2 International Business Exchange™ (IBX®) data center phase 1 expansion in Singapore, which is expected to open in Q3 2009, and the recently completed expansion of the company’s original SG1 center in Singapore. Elsewhere in the Asia-Pacific region, Equinix has recently opened a new SY2 center in Sydney, and it is building a fourth phase expansion of the existing HK1 center in Hong Kong, which is expected to open for customers in Q4 2009.

Telx opens Clifton, NJ datacenter

from Tier 1 Research daily newsletter:

>>Telx opens Clifton, NJ datacenter, adds 3.75MW of critical power to NY/NJ market

Telx opened its new datacenter at 100 Delawanna Avenue in Clifton, New Jersey, last week with a grand opening event complete with ribbon-cutting ceremony, industry panel discussions, facility tours and free food. The opening of the datacenter brings 3.75MW of additional (and much-needed) colocation datacenter to the New York metropolitan .....

Wednesday, April 29, 2009

Tier1: Higher Prices Ahead for Data Centers

from Data Center Knowledge:

>>“I think we’re going to see data center prices increasing significantly in the third and fourth quarter,” Golding said Tuesday in his keynote at Tier1’s first Datacenter Transformation Summit in Herndon, Va. “We think we’re going to see 7 to 10 percent price increases annually until credit eases, plus another 18 months (to fund and build new data centers). This is good for providers but not for enterprises. Now is the time for enterprises to lock in. There are lots of things you can get a discount on by waiting. Data centers are not one of them.”

Shepherd constructs state-of-the-art radiotherapy centre in London

from ContractJournal.com:

>>Constructing one of the most advanced treatment centres in Europe, Shepherd is working in a deep basement with bunkers surrounded by the densest blocks available to control radiation. James Stagg reports.

The new building (pictured) could be no taller than the original five-storey structure so the building had to go deeper rather than higher.

When dealing with technology that delivers state-of-the-art radiotherapy for the treatment of tumours, construction quality and safety has to be of the highest order.

Start date: February 2008

End date: November 2009

Steve Kiene - Internap

Steve Kiene has been with Internap since May 2008, according to his profile on Linkedin:

Senior Director, Technology Engineering

Internap

(Public Company; Internet industry)

May 2008 — January 2009 (9 months)

My team is responsible for getting things done.

Vice President, Engineering

Internap

(Public Company; INAP; Internet industry)

January 2009 — Present (4 months)

I am in charge of the software engineering teams at Internap. I am also in charge of our CDN strategy and vision, as well as future products yet to be announced.

His description, in his own words:

Steve Kiene’s Education

School of Hard Knocks

Life, The real world, 1970 — 2008

I didn't go to college. I didn't even bother to finish high school- I left to start a software company.

We previously quoted a small article about him:

Kiene and crew keen on new Web challenges

What is interesting is that it seems that he writes on the Yahoo MB. The person under his nickname (steve_kiene) has written just a few posts so far, since 2006:

If we look at some of his previous posts about Digital River (a company he sold his previous venture to), it might sound it's the real him:

>>I have to be a bit careful here (I don't want to get sued by DR for talking about confidential things) because I know a lot about the DR-MSFT stuff. However, if I think about only what's publicly known here's what I think:

Our two cents: employees of a public Company shouldn't be allowed to write on a public forum. However, here are his two Internap related posts so far:

>>Anyone can announce that in the future they are going to support something.

Internap already supports Flash Media Server 3.5 with it's DVR and multi-bit rate capabilities. It was released in production on the entire CDN on January 12, 2009.

Silverlight Smooth Streaming capability was released in production on April 24, 2009.

We generally don't talk publicly about what we might do someday. When we release something new, we make sure our customers know about it. That's how we're rebuilding our credibility in the CDN market.

If anything comes from us in the mobile space, our customers will be the first to know.

Down the road, I hope we'll have a level of credibility in the marketplace that allows us to pre-announce things and have it mean something. Under-promise and over-deliver is our focus.

>>Internap fully rolled out Flash Media Server 3.5 the same morning it was announced by Adobe. We just finished rolling out version 3.5.1. I don't think anyone other than Internap has 3.5.1 in full production.

A key point about going after medium-sized customer rather than very large customers- the margins are much higher with medium-sized customers. I'll take 10 medium customers over one large customer any day. Larger customers also require dedicated staff- something I don't see as the best use of our team at this time.

"Bread crumbs" for Akamai are high margin customers that we can focus on and service very well.

Tuesday, April 28, 2009

Customers Make IT Easy With EasyVista.com, Now Available in SaaS Mode

St Albans, 28th April 2009 –

Staff&Line, a European leader in IT management solutions, has announced today that its flagship product, EasyVista, a fully integrated software suite for IT Asset and IT Service Management is now available in a new version, EasyVista 2009, which comes in two options – EasyVista Classic and EasyVista.com.

The EasyVista.com platform is hosted by Equinix, one of the world’s leading datacentres (www.equinix.com), with sites in Europe, the United States and Asia.

Monday, April 27, 2009

National Trust goes virtual to cut data centre power

from CBRonline:

National Trust should be able to slice its data centre energy consumption by 70% after signing a hosting contract for managed virtualised infrastructure services and disaster recovery.

The organisation has signed a deal with eLINIA, a former unit of BT, to migrate physical elements of its existing infrastructure onto a virtual platform run on HP blades in a carbon neutral data centre.

eLINIA’s carbon-neutral hosting service is based out of the Equinix data centre facility in Slough, UK which is powered by Slough Heat and Power Energy.

Sunday, April 26, 2009

Equinix 1Q 2009 results – a significant pickup in customers' bookings in March

Equinix (EQIX) reported 1Q 2009 results last Wednesday night (see its Press Release and Seeking Alpha conference call transcripts).

The Company matched guidance and analysts expectations as far as revenues, and exceeded its own EBITDA target and analysts' EPS estimates.

An interesting comment, during the conference call, was made about “a significant pickup in the month of March” as far as bookings. While this was not described as a trend, yet, it is noteworthy that some confidence is showing up in the business, which is still growing, anyway.

Some highlights on a few metrics we usually follow to better understand the Company's performance:

Revenues came at $ $199.2 million. Exchange rate negatively impacted the Company's 1Q revenues by $1.1 million, compared to the rates assumed in the guidance, and on a same 4Q 2008 constant rate, the negative impact has been about $ $1.8 million. Bottom line, guidance was not exceeded because of the negative effect of the exchange rate.
Europe revenues showed a 6% sequential improvement, while Asia-Pacific had a 10% increase over the prior quarter, in spite of the negative effect of the exchange rate just noted. In other words, on a same currency basis, the foreign subsidiaries showed terrific results, especially given the current economic climate.
Cash gross margins were 64%, slightly above the Company's own expectations for the quarter, positively impacted by continued fiscal discipline related to discretionary costs.
Churn rate was 1.5%. Later on we'll discuss in depth the forecasted increase for the next quarters.
161 new customers in the quarter, a number very similar to last year (160), and a reversal of 4Q 2008, when this number (110, lowest for the year) was giving analysts some concern.
MRR per cabinets continued trending up, with a 2,3% Q/Q increase in the USA and a 4,6% Q/Q increase in Asia
a record 224 10 Gig ports (+22% Q/Q), and a peak bandwidth traffic on US GigE Exchange of 300 gigabits per second, a 17,6% increase over the previous quarter.
650 cabinets added on a quarter end calculation in the USA and Asia (more about this metric later on)

For the first time, the Company disclosed several metrics concerning the European subsidiary, which we will probably fully analyze in a separate article.

More Equinix non financial metrics are available for download on their web site at this link:

View Equinix's Non-Financial Metrics

A solid quarter

In our opinion, 1Q results were solid, and operating metrics mostly healthy.

The market seemed to like the numbers, and the last part of the week saw a good share price appreciation.

New coverage was started by Piper Jaffray & Co with a buy, and some positive comments:

Piper Jaffray & Co. initiates coverage on Equinix Inc. (Nasdaq: EQIX) with a Buy. Price target $75.
Piper analyst says, "Equinix is the clear leader in its peer group. It is carrier neutral, meaning customers can choose from over 200 telecom providers, it is the only truly global provider, and it has created a network effect in its data centers that customers pay a premium for...Equinix has enough capital to expand its portfolio in '09 and gain further share, but it also has the discipline to pull back quickly in response to demand trends. Equinix could be a consolidator of attractively priced assets. The current management team has consistently met and beat expectations. Acquisitions have been prudent, and very well timed."

On the other hand, Oppenheimer raised its price target to $ 67, but moved the Company to Perform as the risk/reward dynamics seemed well balanced to the analyst, Srinivas Anatha. This summary is taken from TheStreet.com:

Equinix (EQIX Quote) downgraded at Oppenheimer from Outperform to Perform. $67 price target. Valuation call, even though the company posted a strong quarter.

Positive comments also came from the major web sites following the sector, like Data Center Knowledge and Telecom Rumblings:

Telecom Rumblings

Equinix Strides Easily Into Q2

Colocation specialist Equinix (EQIX: chart, news) shrugged off the effects of the economy and posted some nice results.

Overall, a solid quarter and a great lead in for the rest of the datacenter space.

Data Center Knowledge

Equinix: ‘Significant Pickup’ in March

Colocation and interconnection specialist Equinix (EQIX) saw a “significant pickup” in customer activity in the month of March, as customers that had deferred decisions made commitments.

Equinix said it was continuing to see strength in bookings from network companies and financial services firms with electronic trading operations. The company added 161 new customers in the quarter, and now has 2,384 customers leasing 44,500 cabinets. Smith said the company would continue to invest in expanding its facilities in key markets, and will be able to self-fund the construction.

Expansion projects and cabinets addition in the quarter

A few words on two very important aspects emerged during the call.

Given the recent economic downturn, Equinix had very well explained, during the previous 4Q 2008 call, that the Company had a plan B in case it was necessary to reduce investments. This is not foreseen as necessary, right now.

As we heard during the call:

Stephen M. Smith - Equinix CEO

We also mentioned that in our plan we had the flexibility of built-in circuit breakers that we could trigger on our spending should our results from the first quarter and visibility into the second quarter not develop as anticipated. With our first quarter results behind us and continued strong pipeline, we're on our way to hitting the objectives of our plan and see no need to trigger any of these circuit breakers at this time.

We consider this one of the most important informations emerged during the call, as we believe that Equinix will enjoy a strategic advantage from the fully funded expansion projects that will, most probably, give the Company available inventory once the economy (and demand for colocation space) will increase, with very few new data center builds available (2010 and beyond time frame).

Equinix will hold an Analyst meeting next May, 5^th, and will probably announce future projects:

Stephen M. Smith

First, as you know, we have a number of expansions that are scheduled to come online in the later half of the year. As in prior years, the planned delivery of this capacity plays a role in our second half revenues. In addition, the back end nature of our first quarter bookings will have an impact on the timing of recognized revenue. A full quarter's value of this revenue will not be seen until the third quarter.

Our 2009 CapEx guidance is also unchanged at $325 to $375 million, of which approximately $60 million is expected for ongoing CapEx. This range includes up to $90 million in unannounced expansion CapEx. We'll provide more color on this at our analyst day in a few weeks.

We still believe Ashburn (Washinghton DC metro) and Silicon Valley may be good candidates for future expansion, and that it will make sense for the Company to acquire the ownership of the NY4 New York metro data center.

Cabinets added in the quarter, in the US and Asia, were 650. This is a “controversial” number. It is probably the lowest one experienced by the Company in the last few years (with numbers normally over 1,000 new cabinets per quarter, ranging from 1,000 to 1,600). We have to go back to 2Q 2007 for a quarter with “only” 800 cabinets added. On the positive side, the Company did succeed in growing revenues nicely in spite of this negative number. We'll see how this datum will be trending in the next few quarters, especially as the expected targets should see Equinix increasing its Q/Q growth in the second half of the year of one or two percentage points, which would probably need going back to the previous, strong average number of cabinets added each quarter.

Churn forecasted for 2Q 2009

One aspect that was widely discussed during the conference call was the forecasted churn of a large customer in one of the Silicon Valley data centers, in the next quarter.

Those of you who have been following Equinix closely in the last few years have probably gone back in time with their memory to the 1Q 2007, when the Company experienced a very high churn (in the range of 4% plus), mainly due to some large “wholesale” positions exiting their contracts.

Let's have a closer look at what happened (from the 1Q 2007 transcripts):

Keith Taylor - Equinix – CFO

Moving to churn and as mentioned above our Q1 cabinet and MRR churn was higher than expected at 4.2% and 4.4% respectively, an increase over the prior quarter and higher than our ongoing guidance level. This churn reflected the impact of proactive churn as we continue our IBX in customer optimization efforts. This also included the decision by two customers to in-source their infrastructure. One of these customers will continue to maintain their peering relationship with us while the other customer we had expected their churn for some time.

One of the customers involved at that time was Google, who had a very large footprint in Ashburn (Washington DC metro).

Of course, this news was quite some shock, at the time, but when we analyze the situation, we do find a few very good reasons why this was a good move for both Companies, and did have a positive impact on Equinix in the long term.

Google had negotiated a very good contract with Equinix, and was a prestigious and necessary anchor tenant for the data center, when signed. As Google grew up, it made perfect sense for them to build their own data center and exit their colocation contracts. As to Equinix, they are not in the wholesale data center business, the space was sold below market cost (and because of their server architecture Google was probably using 4 times the power used on average in that specific data center...), and they could very well sell the same space space to other (smaller) customers at higher prices and increasing the number of cross connects requested (higher margin business).

Google did continue as a customer, as they need Equinix for their peering, and even expanded to other locations worldwide, which was also better balance of risk for Equinix, too, and attractive for the new centers (Google is the kind of customers that generates a positive domino effect).

In the meantime, Equinix was also building a new data center in the same location, whose success was not really impacted by this event. The location had established itself as “the peering point to be at” on the East Coast, with most European Networks landing there, and customers did need to consider it for their mission critical infrastructure.

We honestly believe we are facing a very similar situation. Even if we do not know the name of the customer, this legacy contract will free space that the Company can sell at twice the price, and the customer will probably remain linked to Equinix for what the Company does better, hosting their peering staff.

As underlined during the conference call:

Richard Fetyko - Merriman Curhan Ford & Co.

I guess that just kind of prompted a couple other questions in terms of so you're saying the customer's in multiple sites and they're consolidating those multiple sites into their own location, so they're leaving from [inaudible] Silicon Valley data center from other sites as well?

Keith D. Taylor

No. I don't know what they're doing in other sites. I can't speak of what they might be doing with some of our competitors. What I can tell you is they're going to maintain a number of locations with us and in fact this same customer is going to build a new facility, new deployment with us, in one of our non-U.S. markets. So these things happen all the time. It's just of a size that we want to make sure that we telegraph it and it's going to cause us to be around the 2 percentage range on the quarterly churn in Q2 and Q3.

But this is, again, a very good customer. It's very similar to the discussion point we had a number of years ago about our Google churn. They still are a very good customer of ours, Google, and the customer I'm referring to today is going to continue to be a very good customer with us and grow in multiple markets, just not in this particular market, with us. They're going to stay in our Silicon Valley 1 property, but they're going to relocate out of another Silicon Valley property.

Stephen M. Smith

Said differently, it's like Keith said, it's a server farm. It's a big deployment that was deployed here years ago that probably today we wouldn't even entertain taking. It's actually a good thing for us.

We do expect that Equinix will probably have to work around the space left available, and, similar again to what happened in 2007, need some time before the space will be fully available and occupied by new customers (from the 2Q 2007 transcripts, available at Seeking Alpha):

Keith D. Taylor - Chief Financial Officer

Now, looking at sellable cabinet capacity and utilization levels, our net sellable cabinet capacity decreased slightly to 24,900 as we modified some of our large cage configuration that churned in Q1 to better meet change in customer needs, including increasing our DC prior distribution capabilities.

Long term, a better and more profitable use of one of their Silicon Valley data center. Short term, this availability of cabinets will alleviate the problems in a constrained market and give the Company some more time before a new center is needed in that location, as we still expect that Equinix will consider a new built (or acquisition) before year end, with an obvious lead time before the new space is built/Equinized.