2006: Huge Year for Data Center Stocks
Wall Street loved the data center sector in 2006, as stocks of data center companies outpaced the leading averages and were among the year’s leading performers. Investor enthusiasm for these stocks went beyond the marquee names like Akamai and Equnix, as the biggest gains were recoded by Navisite, Internap and SAVVIS Communications, hardly household names for most American investors. Here’s our roundup of the leading data center stocks and their performance in 2006:
All 10 of the stocks on our chart outperformed the Dow Jones Industrial Average, which gained 16.3 percent, and the S&P 500 (+13.6 percent).
The biggest winner was Navisite (NAVI), a managed hosting company that also provides content distribution services. Based in Andover, Mass., Navisite has 950 customers in 14 data centers in the US, UK and India. The company went public in 1999, and grew through a series of acquisitions after ClearBlue Technologies (Atlantic Investors) bought a controlling stake in the company in 2002.
Investors were also enthusiastic about Internap (INAP), which rounded out its network services portfolio with its $217 million acquisition of Vitalstream, which specializes in streaming video.
SAVVIS Communications (SVVS) also had a big year, and closed with a bang as it announced the sale of its content distribution network (CDN) to Level 3 (LVLT) for $135 million, and quickly unveiled plans to use the cash to build four more data centers.
CDN market leader Akamai (AKAM) and peering specialist Equinix (EQIX) each were among investor favorites, while Infocrossing (IFOX) had an 85 percent gain for the year. Digital Realty Trust (DLR), American Power Conversion (APCC) and Liebert parent Emerson Network Power (EMR) also beat the Dow.