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Equinix (EQIX) Enters into Strategic Alliance with Verizon
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Global data center service provider, Equinix Inc. (EQIX - Free Report) and U.S. telecom giant Verizon Communications (VZ - Free Report) inked a deal, wherein the latter will resell Equinix colocation and interconnection services worldwide.
Per the agreement, Verizon will pair its security, network and advanced communications services with Equinix’s colocation facility to meet the fast-growing demand for security, build hybrid cloud solutions and data services globally.
The deal is likely to strengthen Equinix’s relationship with Verizon and boost its growth trajectory.
Following the announcement, shares of Equinix touched a new 52-week high of $398 on Mar 30, before closing the day at $394.14.
Equinix’s Profit
Equinix is a global interconnection and data center company and a major colocation facility provider. The company provides space, power and cooling facilities to customers. Growing implementation of cloud computing technology has increased demand for data center space. Amazon Web Services, the cloud computing business of Amazon.com Inc. (AMZN - Free Report) and Microsoft Corp. (MSFT - Free Report) are major clients of Equinix.
Naturally, the deal will enable Equinix to help enterprise customers to reap benefits from its cloud infrastructure, including a secure connection, outstanding scalability and infrastructure dependability.
According to Jon Lin, vice president of corporate development and strategy for Equinix,
"Through this agreement, our mutual enterprise customers gain the global scale and interconnection capabilities of Platform Equinix together with Verizon's global IP network, managed security services and advanced communications services."
Also, the deal will enable Equinix’s customers to gauge the performance of application-based platforms from secure International Business Exchange (IBX) data centers. This in turn will enhance user satisfaction and help Equinix to expand its customer base and market share.
Equinix- Verizon
The two companies entered into a definitive agreement on Dec 6, 2016, wherein, Equinix agreed to acquire Verizon’s 24 data center sites, comprising 29 data center buildings across 15 metro areas for a total cash consideration of $3.6 billion. The deal is likely to close by mid-2017.
Bottom Line
Expansion in important markets and consolidation of facilities in existing ones have been crucial to Equinix's core strategy. The company consistently strives to boost its revenue base and profitability by offering upgraded technology to clients. Moreover, the recurring revenue model has been providing the much-needed support to Equinix's revenue stream over the years. The company's cloud and IT service businesses are its fastest growing segments and account for roughly one fourth of the total revenue.
Further, Equinix remains positive on the growing demand for data centers. In order to meet the rising demand for cloud services, this interconnection and data center company is expanding its IBX data centers globally, and gaining popularity among tech companies looking for data management. Thus, the company expects its total addressable market for retail data centers to increase at a CAGR of 8% between 2013 and 2017 and reach $24 billion. Based on this, Equinix projects revenue growth rate of 10% through 2017.
Therefore, we believe that this deal will help the company in strengthening its global footprint and bring in additional revenues.
Shares of Equinix have been steadily treading higher on a year-to-date basis. The stock returned approximately 11.1% compared with the Zacks REIT-Equity Trust industry’s decline of 4%.
However, intensifying competition from established Internet data center operators may affect product pricing, thereby denting Equinix’s margins. A highly-leveraged balance sheet and industry consolidation add to its woes.
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Equinix (EQIX) Enters into Strategic Alliance with Verizon
Global data center service provider, Equinix Inc. (EQIX - Free Report) and U.S. telecom giant Verizon Communications (VZ - Free Report) inked a deal, wherein the latter will resell Equinix colocation and interconnection services worldwide.
Per the agreement, Verizon will pair its security, network and advanced communications services with Equinix’s colocation facility to meet the fast-growing demand for security, build hybrid cloud solutions and data services globally.
The deal is likely to strengthen Equinix’s relationship with Verizon and boost its growth trajectory.
Following the announcement, shares of Equinix touched a new 52-week high of $398 on Mar 30, before closing the day at $394.14.
Equinix’s Profit
Equinix is a global interconnection and data center company and a major colocation facility provider. The company provides space, power and cooling facilities to customers. Growing implementation of cloud computing technology has increased demand for data center space. Amazon Web Services, the cloud computing business of Amazon.com Inc. (AMZN - Free Report) and Microsoft Corp. (MSFT - Free Report) are major clients of Equinix.
Naturally, the deal will enable Equinix to help enterprise customers to reap benefits from its cloud infrastructure, including a secure connection, outstanding scalability and infrastructure dependability.
According to Jon Lin, vice president of corporate development and strategy for Equinix,
"Through this agreement, our mutual enterprise customers gain the global scale and interconnection capabilities of Platform Equinix together with Verizon's global IP network, managed security services and advanced communications services."
Also, the deal will enable Equinix’s customers to gauge the performance of application-based platforms from secure International Business Exchange (IBX) data centers. This in turn will enhance user satisfaction and help Equinix to expand its customer base and market share.
Equinix- Verizon
The two companies entered into a definitive agreement on Dec 6, 2016, wherein, Equinix agreed to acquire Verizon’s 24 data center sites, comprising 29 data center buildings across 15 metro areas for a total cash consideration of $3.6 billion. The deal is likely to close by mid-2017.
Bottom Line
Expansion in important markets and consolidation of facilities in existing ones have been crucial to Equinix's core strategy. The company consistently strives to boost its revenue base and profitability by offering upgraded technology to clients. Moreover, the recurring revenue model has been providing the much-needed support to Equinix's revenue stream over the years. The company's cloud and IT service businesses are its fastest growing segments and account for roughly one fourth of the total revenue.
Further, Equinix remains positive on the growing demand for data centers. In order to meet the rising demand for cloud services, this interconnection and data center company is expanding its IBX data centers globally, and gaining popularity among tech companies looking for data management. Thus, the company expects its total addressable market for retail data centers to increase at a CAGR of 8% between 2013 and 2017 and reach $24 billion. Based on this, Equinix projects revenue growth rate of 10% through 2017.
Therefore, we believe that this deal will help the company in strengthening its global footprint and bring in additional revenues.
Shares of Equinix have been steadily treading higher on a year-to-date basis. The stock returned approximately 11.1% compared with the Zacks REIT-Equity Trust industry’s decline of 4%.
However, intensifying competition from established Internet data center operators may affect product pricing, thereby denting Equinix’s margins. A highly-leveraged balance sheet and industry consolidation add to its woes.
Currently, Equinix carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>