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EQIX: the "Inter" in Internet
04/02/2004 12:00 am EST
Through his in-depth analysis of long-term technology trends,George Gilder's Technology Report stays a step ahead of the rest of the tech crowd. It is a fascinating newsletter and an essential source of information for sophisticated investors and tech industry leaders.
"The world is now flocking at the door of Google, the search engine firm with its impending $20 billion initial public offering. But we have long known how to ‘search' for Google, by looking at Equinix (EQIX NASDAQ), the home of a hundred thousand Google servers. Equinix reports that Google’s servers break all records for massive density and power consumption and yield a high percentage of Equinix’s booming revenues. Now Microsoft and Yahoo have announced plans to add some 200 thousand more servers to the search engine fray erupting around the imminent Google IPO. Soon these two estimable arachnids on the Web–Microsoft and Yahoo–may well be contending for the title of Equinix’s most profitable customer.
"Storewidth is the term we use to define the convergence of bandwidth with storage, expanding massively everywhere. Our leading storewidth player today is Equinix. But who would buy a stock that has appreciated by a factor of almost 15 in the last year or so? If that stock were Equinix, we would. Like so much of the telecom and Internet worlds, EQIX began 2003 priced for bankruptcy. It ended the year as a top ten NASDAQ performer, apparently well-valued. But a mildly dilutive recent consolidation of debt and $75 million infusion of cash led to a price pullback, and creates a new opportunity for investors and its balance sheet improvements come at a time when Equinix is gaining a strategic stronghold on storewidth.
"Jay Adelson founded Equinix in 1998. He had previously built one of the Internet’s key meeting points, the Palo Alto Internet Exchange, for Digital Equipment. He knew the inner workings and politics of the Internet and with his background built not only the most secure data warehousers, but also lured all the world’s largest networks and content companies into these facilities. Its exchange allows ISPs, content providers, and e-commerce companies to quickly and cheaply hook into a Gigabit Ethernet platform and connect to other major networks. Data traffic on its exchange boomed 400% in 2003. The company is standardizing products and eliminating politics in a way that enhances liquidity and efficiency in the bandwidth world. With the shakeout of the Internet hosting business, Equinix has established itself as the indispensable ‘inter’ of the Internet."
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