January 10, 2007
Equinix Acquires New Data Center in Tokyo to Accommodate Strong Growth in Region
FOSTER CITY, Calif. — January 10, 2007 — Equinix, Inc. (Nasdaq: EQIX), the leading provider of network-neutral data centers and Internet exchange services, today announced that it has added a second Internet Business Exchange™ (IBX®) data center to its Tokyo presence, resulting from the acquisition of a long-term building lease and the purchase of assets from VSNL International. Equinix entered into an agreement to purchase the VSNL International leasehold improvements for $7.5 million and will lease the building from the current landlord. In addition, the company will provide colocation services to VSNL International in this center. This transaction allows Equinix to expand its capacity in a market where it has operated since 2003 in response to strong customer growth. As a result of this acquisition, Equinix will incur incremental costs attributed to this transaction, and given the recent sale of the Honolulu IBX, Equinix has updated guidance for the year ending December 31, 2007.
The data center, located in the Tokyo Metropolitan area, will add approximately 740 sellable cabinets and approximately 73,000 square feet, increasing Equinix's Tokyo footprint to approximately 116,000 square feet. Equinix intends to place new customers in the center during the fourth quarter of 2007.
Once Equinized, the new center will feature a physical infrastructure that is consistent with Equinix's industry-leading standards for high-performance security, environmental control and power availability. The power infrastructure will support blade technologies and other high power density deployments. The center will be interconnected to the existing Tokyo IBX through redundant dark fiber links managed by Equinix. This interconnection fabric will enable occupants in each center to have direct access to each other as if they were in the same location, and will provide immediate access to the more than 15 networks currently operating within Equinix's Tokyo IBX.
VSNL International will continue to operate in the center as a long-term customer of Equinix, providing its standard suite of communications services to its customers in Tokyo, including colocation services. Existing VSNL International customers, several of whom are already operating in other Equinix IBX centers, will remain in the center as VSNL International customers.
“We have seen robust growth in customer deployments at our existing Tokyo center, mirroring the increasing demand for Internet and networked services in Japan,” said Peter Van Camp, CEO of Equinix. “We were very fortunate to have the opportunity to acquire this high-quality center, as it will enable us to more than double our original capacity and maintain our momentum, in this important market.”
Equinix intends to invest $25.0 to $30.0 million of capital expenditures in 2007 to make additional infrastructure enhancements to this center. The center is expected to generate, at capacity, annual revenues between $20.0 and $25.0 million. Equinix expects long-term cash gross margins from this expansion to be in excess of 65%, consistent with the company's model for previous expansion centers.
As a result of the acquisition of the new Tokyo data center, as well as the recently sold Honolulu IBX, Equinix has updated its guidance for the year ending December 31, 2007. Total revenues are expected to remain unchanged at $352.0 to $362.0 million. EBITDA, a non-GAAP metric which excludes stock-based compensation expense and other items as defined at the end of this press release, is now expected to range between $132.5 and $138.5 million which reflects $4.5 million in incremental net costs directly attributable to these two transactions. Capital expenditures are now expected to range between $255.0 and $275.0 million, which reflects the incremental expansion capital expenditures attributed to the build-out of the new Tokyo expansion IBX. Ongoing capital expenditures for 2007 remains unchanged at $30.0 million.
"We are pleased to have entered into this transaction with Equinix which is in line with our global efforts to reduce overall operating costs and, in light of Equinix's plan to invest in expanding this facility, will ensure continued and enhanced services to VSNL and our customers in Tokyo, an important market for us," said Vinod Kumar, President, VSNL International.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of IXEurope into Equinix; a failure to receive significant revenue from customers in recently built out data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; the results of any litigation relating to past stock option grants and practices; and other risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
Equinix and IBX are registered trademarks of Equinix, Inc. Internet Business Exchange is a trademark of Equinix, Inc.