Equinix 3Q 2010 Preview
Equinix will be reporting 3Q 2010 results next Tuesday, October 26.
After the company lowered its revenue guidance on October 5th, the whole data center sector suffered a deep selloff, with several Companies losing more than 10% of their market cap as investors assumed that Equinix's revenue warning might have strong implications for all the players in the sector.
While it is worth noting that, in spite of missing, for the first time after several years, its own guidance, Equinix will probably keep growing about 20% organically in 2010, investors have already expressed their concern about two main factors: pricing and growth prospects in the colocation sector.
Equinix has already tried addressing some of the questions arising from its post-warning conference call through an official filing: “Equinix, Inc. Responses to Questions Pertaining to Business Outlook dated October 7, 2010”.
During its October 26th conference call, Equinix will also give an initial view of its expectations for 2011, something quite unusual for the Company after Q3 results. As many analysts suggested, it is certainly necessary for Equinix's management to try to re-build investors' confidence after the sell off, as there seem to be no short term catalyst capable to invert the recent trend.
However, while the stock action after October 5th has been quite clear, with the price falling from about $105 to around $70, to stabilize in the $75 range right now, it is also interesting to note that most institutional investors seem to have kept confidence in the long term prospect of the Company.
According to the most recent available filings, only Wellington Management, among institutions owning more than 5% of the Company, has cut its holding in half (from 10.18% to 5.12%) after the revenue warning, with most other institutions (Lone Pine Capital, Shumway Capital Partners, Goldman Sachs Asset Management and Bamco) keeping their holding steady.
As we briefly said previously, there will be several metrics closely watched by the investing community during this conference call, like revenue growth, EBITDA, pricing, churn, cabinet equivalents billing, etc.
We believe it might be useful for our readers to get a few of them put together in a spreadsheet, so that you can do your own modelling and follow these key data in their full trend over the last quarters: