Equinix Revises Guidance – Analyst Blog

The global data center service provider Equinix Inc. (EQIX) recently came out with a revised version of its second quarter and fiscal year 2010 earnings, which incorporates the forecasted results of the recently acquired Switch & Data Facilities Company Inc.

 

For the upcoming second quarter of 2010, the company now expects revenue in the range of $296.0 million to $298.0 million, a substantial increase from its previous guidance range of $258.0 million to $260.0 million. Gross margin for the quarter is expected to remain at 64.0%, while cash selling, general and administrative expenses are expected to be $64.0 million. The company expects to incur a capital expenditure in the range of $155.0 million to $185.0 million.

 

For fiscal year 2010, total revenue is now expected to be in the range of $1,225.0 million to $1,240.0 million, revised upward from the previous guidance of $1.06 billion to $1.08 billion. Gross margin for the full year is now expected to be 64.0%, while adjusted EBITDA is expected to hover in the region of $525.0 million to $535.0 million. The company also expects to incur a capital expenditure in the neighborhood of $520.0 million to $580.0 million.

 

The company declared a first quarter 2010 EPS of 35 cents, falling short of the Zacks Consensus Estimate of 43 cents and declining from 40 cents reported in the year-ago quarter. While there was a decline in net profit, the revenue of $242.6 million improved 3.0% sequentially and 25.0% from the year-ago quarter.

 

For the last four quarters, the company witnessed an average earnings surprise of 39.80%. However, we believe such surprises are unlikely to continue in the upcoming quarter, as the most accurate estimate for the second quarter is 28 cents, lower than the Zacks Consensus Estimate of 29 cents.

 

We believe the miss could be attributed to the fact that the telecommunications industry is currently undergoing consolidation. Therefore, increased utilization of existing collocation space by companies could dampen expansion opportunities available to Equinix.