Equinix, Inc. (EQIX)

Rated one star.

Our company hosts with equinix and I have personally toured their facilities. They are top notch.

These guys have decent revenue and growth and good earnings, but heavy debt. With the PEG at 2 and EnterpriseValue:EBITDA at 12, I'm shorting into the recent run-up. Short-term trade only.

Short term trade. Stock is overbought.

Very highly overvalued.

Way overvalued on all fundamentals - P/E, P/S, D/E, C/F, and doesn't have the cash to grow in a recession.

expensive.

A company with low earning, but great growth and market position. However, their growth is financed by heavy debt which will not be able to continue with the "credit crunch". Would be a great buy in a strong economy, but with the economic slow down this stock is way overpriced for their earnings as the growth will not be able to continue on debt alone and they have no cash income to do it themselves.

moving upward a stock to watch

I am shorting this sucker big time, with 650 PE in this sluggish economy!!?? Have no idea who the hell would buy it at this point…..well people were paying 700 – 1000 bucks for Exodus or PMC Sierra back in a days…..

Over-valued.

strong 1Q

Telecom is a hot sector.

PE of 192, forward PE 85.

Loaded with debt.

Return on assets <1%.

Prospects depend on being less expensive than customers could do on their own.

why using exodus isn't a good comparison:

- almost all eqix customers are credit worthy and aren't dependent upon raising more capital to fund their operations

- HUGE barriers to entry which don't achieve scale on a small basis. you need to be a big player and commit lots of $$.

- equinix focuses on one thing, the operations of physical assets and the abillity to interconnect within them. point is they aren't trying to do too much. many argue for them to move up the stack and manage apps and hardware and other non core services. the fact of the matter is the MSP market is expensive to build, expensive to maintain and dependent upon third party licensing, none of which are eqix's competencies. the interconnections are almost 100% margin and have almost zero maintenance costs. Inter connections approx 24% of revenue

- on a site by site basis, eqix is making $$ hand over fist. in aggregate, they are 'losing' money because they are building datacenters. don't fret, the money they spend today on datacenters will be paid back via renting those sites out and history shows that to happen within 18 months of opening. for more on the cost dynamics of bldg/running/operating a datacenter see: http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_E/threadview?m=tm&bn=6238&tid=45220&mid=45244&tof=18&frt=2

- insider selling? yeah, on the surface it appears they are dumping while the getting is good. maybe they are but remember, all of those execs have been there since pre ipo as in pre 1999 and have seen the company go through thick and thin. the 5 or 6 million each has cashed in may seem like allot but when spread over a 7 or 8 year period it's not unreasonable. don't place too much weight on the fact they're selling, it's probably 99.99% of their portfolio tied to eqix so it's only prudent that they sell. i'm not defending how much they give each other by any means but in reality the slate was wiped clean when they did the 32 for 1 reversal and since them the stock has gone from $5 to $90 and market cap from $150M to $2.7B. hard to cite any cases which would set a precedent they are rewarding themselves with too much.

- market demand for datacenters is greater than it ever has been and available supply is next to zero. you have supply and you have pricing leverage.

- google is spending $3B on datacenters btwn 2006 - 2008, MSFT less than google but still over $1B in same timeframe. If these two companies have that kind of demand what does the rest of the global economy have? it's not slowing down from a demand/requirement perspective.

- new entrants/competition can pose a threat? over time yes but it would take a healthy appetite of patience and willingness to front most of the cash. opportunity cost of lending to this type of business is too high given what alternative options to loan money on are...ie, would you rather repo a datacenter or a 747? It would cost at least $3B to duplicate the datacenters eqix has and then you'd have to go get customers to fill it up to generate the revenue to pay back your loans and investors

outperform

Seems crazy to me, how this stock has gone up. No earnings, no identifiable sustainable competitive advantage, and it seems to be making some big expansionary investments (financed by debt, since it doesn't have any earnings) just at a time when the economy is moving into a "soft patch," if not a recession. I'm calling irrational exuberance on this one.

World-class Data Center facilities - Management is a question mark.

Everybody needs multiple places