Wednesday, October 6, 2010

Equinix Implodes, What's the Impact to Terremark Worldwide?

Equinix (EQIX) is down over 30% today due to meager revenue shortfall of roughly 2%. Since EQIX is a competitor of Terremark Worldwide (TMRK) which is a prime holding of the Opportunistic and Growth portfolios it's worth checking out the potential collateral damage.

TMRK is down around 5% today on back of this negative news from EQIX. Oddly though the news from EQIX isn't all that bearish considering they were able to boost EBITDA numbers and possibly half of the revenue issue comes from an acquisition that hasn't worked out as well as expected. Should TMRK be down on this news? Probably considering the run recently, but in no way should be news make an investor of TMRK throw in the towel. Higher EBITDA numbers are more important then revenue. Not to mention that TMRK isn't stuck with a bad merger deal.

Nortia Research has a good article on the warning (as the market sees it though they also guided up) so I won't waste my time repeating the details on EQIX. Our thought is that you look to add to TMRK on this weakness. Its very overdone and actually impacting the whole 'cloud computing' space including favorite Riverbed Tech (RVBD).

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