Back to top

Analyst Blog

It is difficult these days for companies to operate without data centers. However, surplus availability of data centers has somewhat affected the demand for data centers in recent times.

San Francisco-based data center developer 365 Main Inc. has announced the purchase of 16 data centers from Equinix (EQIX - Analyst Report) in 16 markets across the country.

The sale enables Equinix to streamline its business and possibly consolidate some of the existing operations into a new data center in Seattle to open early next year.

Equinix is selling the 16 data centers for a total purchase consideration of roughly $75 million. 365 Main will utilize this full set of data centers to serve a range of corporate customers.

Equinix’s John Churchill has joined 365 Main as the vice president of sales. Also, three other employees from Equinix -- Ross Warrington, senior director of operations; Rene Vazquez Rivera, director of operations in the East; and Jason Kiser, director of operations in the West -- joined 365 Main’s executive team.

Equinix’s worldwide presence has resulted in high network density with a vertically focused approach, which will continue to support demand.

The need for data centers has increased over the years and demand has grown with the growing popularity of Facebook (FB - Analyst Report) and Twitter. This remains a long-term driver of Equinix’s business.

The data center market received a blow in recent times when there were multiple bank failures. A lack of balance in demand and supply could see this happening yet again.

While we remain optimistic about the company’s recurring revenue model and expansion plans, competitive threat from the likes of AT&T Inc. (T - Analyst Report) and Verizon Inc. (VZ - Analyst Report) should not be discounted. European exposure and industry consolidation are also causes for concern.

Currently, Equinix has a Zacks #3 Rank, implying a short-term Hold rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.34 +2.73%
CHINA BIOLO… CBPO 47.59 +2.60%
BITAUTO HOL… BITA 79.40 +2.15%
GILEAD SCIE… GILD 104.45 +2.13%
SOUTHWEST A… LUV 31.89 +2.08%