Equinix Will Step Up Expansion Plan

Colocation and interconnection provider Equinix is expanding its data center space in two key European traffic hubs, and has added an extra $100 million to its capital budget build additional data centers in 2011, company executives said this week.

On Wednesday Equinix (EQIX) announced expansions to its London 5 and Amsterdam 2 data centers,citing strong customer growth in both cities.The company will invest $43 million to add 1,600 cabinets in phase II of London LD5, and another$16 million for phase II in Amsterdam AM2, which will add 500 cabinets

"Based on the strong demand and the early results from our Amsterdam 2 Phase I asset, we're proceeding with the second and final phase in Amsterdam," said Equinix chief financial office Keith Taylor. " For London, we started construction of the second phase of our London 5 IBX. We're continuing to grow our financial ecosystem, with deals such as Bloomberg, and we're adding customers across our financial enterprise and network vertical segments in the London market."

Stock Rises on Earnings News

The announcements were made in connection with the release of Equinix' fourth quarter earnings. Fourth-quarter net income was $13.76 million or $0.29 per share, compared with $17.72 million ($0.44 per share) in the prior-year quarter.

Investors reacted positively to the results. Shares of Equinix gained $3.67 a share Thursday to close at $92.31, a gain of 4.1 percent on the session. While analysts were concerned about a slight dip in monthly recurring revenue in North American cabinets, the Equinix leadership assuaged those concerns during the quarterly conference call.

"Pricing remains firm," said Taylor. "We're not doing anything specific to get more activity into Switch and Data assets," he added, referring to the portfolio of facilities Equinix acquired in its acquisition of Switch and Data in early 2010.

"We're happy where our price is, we think it's firm, we get a very good return based on the price points that we're at today," said Taylor.

Equinix CEO Steve Smith emphasized that Equinix would remain disciplined its its expansion strategy and use of capital. But Smith said that a year-end review of the pace at which customers are occupying space suggests it will need more capacity.

"We are evaluating deploying additional expansion capital in both Europe and North America for 2012 growth, which would affect the overall capital plan for this year," said Equinix CEO Steve Smith. As a result, the company increased its expected expansion capital to a range of $300 million to $400 million. Combined with ongoing "maintenance" CapEx of $100 million, that raises total CapEx guidance for 2011 to a range of $400 milliont o $500 million.

"Our fill rates, our bookings, our pipeline, the robustness of our pipeline, the demand and our intelligence of the competitive builds in those markets suggest to us that we have opportunity for more growth," said Smith.