Equinix Opens New Data Center - Analyst Blog

Recently, Equinix Inc. (EQIX) and Mapletree Industrial Trust, a real estate company, inked an agreement to construct the third international business exchange (IBX) for the former in Singapore.

The new data center will enable the extension of the Equinix platform, which will help cater to the growing need for premium interconnection and data center connection in that region.

This new IBX will be located close to the existing SG1 data center and will be connected through a fiber optic network. The connectivity and nearby location will assist SG1 in accessing the new IBX and thus, will help the business requirements of the existing customers of SG1. The company plans to unveil the new data center in the second half of 2014.

The emerging markets including India, Indonesia and China are expected to witness high spending growth rates during 2014. The company is attempting to capitalize on this opportunity through its public cloud services.

Although data center demand is increasing across major geographic regions, industry tracker “lifelinedatacenter.com” believes that in 2013, data center companies may have to incorporate new technologies such as hybrid technology (a collaboration of private and public clouds), IT-as-a-service, wherein service providers will maintain cloud infrastructure within the data center, and remote employee access technology. The data centers may have to improve infrastructure as well.

Technological enhancement is necessary for the existence and growth of the data centers. However, the company must work to reduce its debt level to improve its bottom-line. Further, competitive threats from the likes of AT&T Inc. (T) raise our apprehension. European exposure and industry consolidation ( relating to reduction in demand) are other headwinds.

Equinix carries a Zacks Rank #3 (Hold). But investors can consider other stocks such as Arris Group Inc. (ARRS) and Acme Packet Inc. (APKT). While Arris has a Zacks Rank #2 (Buy), APKT carries a Zacks Rank #2 (Buy).