Leading data center solutions provider Equinix Inc. (EQIX) recently announced the opening of the second phase of its fifth International Business Exchange (IBX) data center (LD5) in London.
The opening of LD5 in April 2010 marked the setting up of Equinix’ fiftieth data center across the world. According to management, LD5 will be the largest data center in the U.K. and the second largest in Europe. The 27,800 square meter data center has been developed within the LD4 campus (opened in 2007).
The data center will be built in four phases. Phase two doubles the initial 1,400 cabinet capacity of LD5. Upon completion, the data center will have a capacity for 5,600 cabinet equivalents in total.
The rolling of the second phase demonstrates Equinix’s ability to help its customers fully leverage all the benefits of an interconnected world. London has been a hub for the fastest growing data center market. Further expansion of its data center there will allow Equinix to capture a lion’s share of the market.
We are also encouraged by Equinix’ expansion strategy in the Americas, Europe and the Asia-Pacific region. In June, the company opened its third IBX data center in Brazil, based on the platform provided by ALOG Data Centers of Brazil S.A. (acquired in April). April also saw the opening of the fifth IBX data center in Dallas, Texas. This was the first of the company’s two-phase expansion plan that would strengthen its footprint in the U.S.
In March, the company announced the construction of its fourth IBX data center, PA4, in the Paris metropolitan area. Equinix’ IBX expansion is also gaining traction in Tokyo. After the success of its first IBX data center (TY1) in that city, the company built the second one (TY2) and has plans for the third, given its access to bandwidth cable systems and dominant market position in emerging wireless Internet access technology and networks in Asia.
Equinix boasts a presence across various geographical regions and is increasingly becoming popular among major players in the tech industry for data management. The company’s worldwide presence has resulted in high network density with a vertically focused approach, which will continue to support demand.
We are also optimistic about the company’s recurring revenue model and current expansion plans. Despite all the positives, competitive treats from the likes of AT&T Inc. (T) and Verizon Inc. (VZ) raise our apprehension. European exposure and industry consolidation are also causes for concern.
Equinix has a Zacks #3 Rank, implying a short-term Hold rating.
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