Equinix revenue warning sends data-center shares down

Analysts cut ratings of data-center host; other sector players take stock hit

By  

Shares of data-center services provider Equinix plummeted in trading Wednesday after the company issued a revenue warning for the third quarter.

Through mid-afternoon trading, Equinix (NASDAQ: EQIX) was down an astounding 33 percent to 70.71 (after hitting a low of 69.42). Late Tuesday the company revised projected revenue for Q3 and the full year, though not dramatically. Here's what the company said:

Equinix now expects third quarter revenues to be in the range of $328.0 to $330.0 million, the midpoint of which is 2.2 percent lower than the midpoint of its previous outlook, and total revenues for the full year to be approximately $1,215.0 million, which is 1.2 percent lower than the midpoint of its previous outlook.

So, off by 2.2 percent in Q3 and 1.2 percent for the year. And they're getting hammered for it.

And so are the other cloud companies. Also down Wednesday are Akamai Technologies (NASDAQ: AKAM), 8.5 percent; Terremark Worldwide (NASDAQ: TRMK), 4.6 percent; Rackspace Hosting (NYSE: RAX), 10.8 percent; and SAVVIS (NASDAQ: SVVS), 10.3 percent. That's a lot of value melting down.

In revising revenue estimates, Equinix cited "underestimated churn assumptions in Equinix’s forecast models in North America, greater than expected discounting to secure longer term contract renewals and lower than expected revenues attributable to the Switch and Data business acquired in April 2010."

Following Equinix's revised guidance for Q3 and the fiscal year, Wells Fargo downgraded shares to Market Perform from Outperform. Citigroup and Oppenheimer also downgraded Equinix shares, with Citigroup saying "sales growth is likely to decelerate in 2011."

Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Answers - Powered by ITworld

Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Ask a Question
randomness